The government has confirmed that anti-money laundering (AML) and counter-terrorist financing (CTF) supervision of law firms and accountancy practices will transfer from their existing professional body supervisors to the Financial Conduct Authority (FCA). The reform will bring additional 'fit and proper' requirements, a new fee regime and a shift in supervisory approach. Implementation will take several years and many details remain to be ironed out, but the policy position is now settled. This article sets out what firms need to know.

What is happening?

In June 2026, HM Treasury published its consultation response on the reform of AML and CTF supervision for professional services firms. The headline change is a significant one: the FCA will become the single AML/CTF supervisor for legal and accountancy service providers and trust and company service providers, taking over from the existing professional body supervisors such as the SRA, the Law Society for Scotland, the Law Society for Northern Ireland and the accountancy bodies. The Office for Professional Body AML Supervision (OPBAS) will cease to exist once the reform is complete.

As previously covered in our December 2025 article, the reforms are designed to deliver a more consistent, risk-based approach to AML/CTF supervision across the professional services sectors, addressing concerns about fragmented oversight and the potential for firms to move between supervisors or operate at the margins of supervisory remits. The FCA will be responsible for maintaining a public register of supervised firms, providing a single authoritative source for identifying which firms are legally permitted to undertake in-scope activity. The existing enforcement powers under the Money Laundering Regulations 2017 will be extended to the FCA in respect of its supervision of professional services firms.

Key concerns about dual regulation

One of the most prominent themes in the consultation responses was the risk of dual regulation and dual enforcement. Respondents expressed concern that firms could find themselves investigated by two supervisors (for example, the FCA and the SRA) separately and in respect of the same issue. Others argued that a firm should not face two sanctions from two different supervisors for the same breach. Several respondents suggested that the primacy of regulators in different circumstances should be established in legislation, for example by providing that where a firm has breached both AML/CTF regulations and professional codes of conduct, only the FCA should be able to take enforcement action.

In particular, the 'fit and proper regime' is a central and somewhat contentious element of the reform. Legal and accountancy service providers have not previously been subject to this regime because their professional body supervisors carry out their own suitability and fitness assessments under separate statutory frameworks (for example, the SRA's character and suitability requirements for solicitors). Under the new regime, regulation 58 'fit and proper' requirements will be extended to legal and accountancy service providers. Regulation 58 enables supervisors to assess not just criminal convictions but also "integrity, competence and compliance history" of firms and their beneficial owners, officers and managers. 

Given that solicitors and other legal professionals already undergo extensive suitability, character, and probity checks conducted by the SRA, respondents argued strongly that a parallel FCA-administered fit and proper test would be "unnecessary, duplicative, and incompatible with existing regulatory frameworks".

There were also concerns raised about fees. Respondents cautioned that introducing FCA fees without corresponding reductions in existing regulatory costs risks firms paying duplicative or overlapping charges, particularly where they continue to pay professional body fees alongside new FCA charges. Smaller firms and sole practitioners may lack the financial resilience to absorb additional regulatory overheads. Some respondents warned that higher regulatory costs could lead firms to reduce AML/CTF regulated activity, withdraw from certain markets, or pass increased costs on to consumers, potentially limiting access to legal and accountancy services. The FCA will consult separately on the detailed structure of its fee model.

The government has acknowledged these concerns but has stated that it believes its proposals are proportionate given the high-risk nature of these sectors, and it does not consider that additional legislative provision on regulatory primacy is necessary. It intends to legislate for an ongoing information-sharing regime between the FCA and existing professional body supervisors, alongside a permanent obligation to cooperate, with the aim of minimising duplication and reducing the risks associated with dual regulation and dual enforcement.

The precise mechanics of how this will work in practice remain to be determined.

Timescales

The consultation response does not specify a fixed "go live" date for the transfer of supervisory responsibility. HM Treasury acknowledges that implementation "will inevitably take several years". During this time the UK's defences against money laundering and terrorist financing must be safeguarded, and in this period, OPBAS will continue to operate and oversee the work of the professional body supervisors, who will retain their supervisory responsibilities.

Key takeaways for law and accountancy firms

The direction of travel is now settled. Law firms and accountancy practices will have their AML/CTF procedures supervised by the FCA rather than their current professional body supervisors. This is no longer a proposal under consideration; the government has confirmed its policy position. 

The FCA's supervisory approach will be underpinned by proportionality and a risk-based methodology, but firms should expect a different supervisory culture. The FCA already supervises a wide range of firms, from large multinational institutions to small businesses and sole practitioners, and intends to build sector-specific expertise. However, respondents highlighted the need for the FCA to avoid a "one-size-fits-all" approach to accountancy and legal firms. The distinctiveness of the Scottish legal system was also raised as a particular concern.

How to prepare

Although the precise timescales remain to be confirmed, there are some practical steps that law and accountancy firms could consider taking in advance of the transition.

• Review compliance frameworks: Firms should review their existing AML/CTF compliance frameworks to ensure they are robust and well-documented. The FCA's supervisory expectations are likely to be rigorous, and firms that are already operating to a high standard will be better placed to manage the transition smoothly.
• Review 'fit and proper' governance arrangements: Firms should also review their internal governance arrangements, including the roles and responsibilities of their 'beneficial owners, officers, and managers', given that 'fit-and-proper' requirements will be applied to the legal and accountancy sectors once supervisory responsibility transfers. Ensuring that relevant individuals can demonstrate competence and compliance history will be important.
• Budgeting: Additionally, firms should begin to budget for the potential cost implications of the new fee regime. While the FCA will consult separately on fees, the government has confirmed that the FCA's AML/CTF supervisory activities will be funded on a full cost-recovery basis. Understanding the likely financial impact, particularly for smaller firms, will be essential for forward planning.
• Monitor: Finally, firms should monitor developments closely. HM Treasury and the FCA have committed to providing further detail on transition and implementation plans, and there will be additional consultations on matters including the fee structure. We'll be reporting on the latest developments.