The U.K. government quietly announced last week maybe one of the most significant shake-ups in professional regulation in years, with news that the Financial Conduct Authority (FCA) will soon take over anti-money laundering (AML) and counter-terrorist financing supervision for law firms, accountancy practices, and corporate service providers.
If implemented as planned, this would replace 23 separate regulators and professional bodies with a single, central authority, which could effectively end the era of self-regulation for AML compliance in the legal and accountancy world.
I guess on paper the change looks logical. The FCA already oversees the financial services sector, bringing a data-driven, risk-based approach that has been pretty effective in identifying systemic weaknesses. So, consolidating supervision under one roof, according to HM Treasury, will reduce inconsistency and strengthen the U.K.’s defenses against illicit finance. But in practice, this reform could transform how compliance is managed in both law and accounting firms, and I’m not entirely sure everyone is convinced the transition will be smooth.
For decades, professional self-regulation has operated on principles of trust, proportionality, and professional judgment. The FCA, by contrast, is a rules-driven regulator. It demands structured reporting, demonstrable oversight, and auditable evidence.
For law firms, this will mean a fundamental shift, as by and large, solicitors are accustomed to oversight from the Solicitors Regulation Authority (SRA), which understands the nuances of legal privilege, client confidentiality, and the solicitor-client relationship. One would expect the FCA to take a broader and more formal approach which could require senior management functions (where it assigns specific compliance responsibilities to named individuals under its Senior Managers and Certification Regime (SMCR), explicit documentation of AML controls (whereby it expects firms to keep detailed auditable records showing how AML risks are identified and mitigated), and evidence of board-level accountability. This means senior leadership and boards will need to be directly engaged in AML oversight.
That change alone will test the governance structures of many firms that have historically relied on professional discretion rather than regulatory prescription.
How will the FCA’s remit align with the Economic Crime and Corporate Transparency Act (ECCTA), which recently expanded the SRA’s fining powers for economic crime? If AML oversight shifts away from the SRA, how will those powers now be exercised?
Accountants seem no more relaxed about the move. Many fear the FCA’s style of supervision will be more bureaucratic, less flexible, and considerably more demanding than the collaborative oversight they’ve had from professional bodies like ICAEW and ACCA.
Smaller firms could experience higher compliance costs and a heavier administrative burden, with more time spent documenting rather than delivering client service. There’s also unease about the sheer scale of the FCA’s new responsibilities: around 60,000 firms across legal, accounting, and corporate services. Whether it can manage that volume effectively and proportionately remains to be seen.
So back to my profession… what should compliance leaders be preparing for now?
Even before the transition date is confirmed, law and accounting firms should prepare for a world where documentation, governance, and individual accountability will take center stage. Compliance leaders should start reviewing internal frameworks, mapping AML responsibilities, and ensuring that their Money Laundering Reporting Officer (MLRO) and Money Laundering Compliance Officer (MLCO) roles are clearly defined. If, as expected, the FCA assigns these as senior management functions (SMFs), they may soon require formal authorization and be personally accountable under the FCA’s conduct rules.
I see this as more than just a compliance update, and more of a governance evolution. You’ve heard me say this time and time again; firms that invest early in systems, oversight, and fresh and adaptive compliance training will adapt more smoothly. Those that treat these changes as business-as-usual may find themselves struggling to meet the regulator’s expectations once the new regime takes place.
This reform is signalling a broader shift in how professional services are being viewed by government. And for compliance professionals, that means developing the same mindset and muscle that they have honed for years, which is a world of data-driven risk assessment, cross-functional governance, and evidence-based accountability.
The FCA’s takeover may well lead to stronger, more consistent AML controls. But it will also demand a new kind of compliance leadership.
