In October 2025 the UK Government declared fundamental changes to the supervision of anti‐money laundering (AML) and counter-terrorism financing (CTF) in the professional services sector. The core measure was that the Financial Conduct Authority (FCA) will become the single professional services supervisor for AML/CTF in the legal, accountancy and trust & company service provider sectors.
This development marks a major shift from the previous regime, which relied on a mix of public-sector supervisors (such as HMRC, Gambling Commission) and a large number of professional body supervisors (PBSs) overseeing legal and accountancy firms. In essence, the new model aims to simplify a fragmented regulatory framework and enhance oversight of professional services firms that are potentially vulnerable to misuse for illicit finance.
The Importance of this Reform
The drive for reform can be traced to findings from the 2022 review of the UK’s AML/CTF supervisory regime. The review concluded that, while improvements had been made, “some weaknesses in supervision may need to be addressed through structural reform.”
Key issues included:
- The presence of 22 different PBSs plus three statutory public supervisors overseeing about 90,000 + firms, creating inconsistencies and duplication.
- Challenges in coordination, enforcement and information-sharing across multiple supervisors and sectors.
- Concern that the professional services sector (legal, accountancy, trust & company services) posed particular risk routes for money-laundering and terrorist-financing which were less tightly supervised than banks and larger financial institutions.
In view of these vulnerabilities, the Government’s strategy (as set out in the Economic Crime Plan 2023‑26) included a commitment to reform the supervisory regime for AML/CTF.
Government’s Decision and Key Features
On 21 October 2025, the Government announced its decision that the FCA will take on the supervisory responsibilities for AML/CTF in professional services firms, specifically legal service providers (LSPs), accountancy service providers (ASPs), and trust & company service providers (TCSPs).
Some of the main features of this decision:
- The FCA builds on its existing public-sector supervisory role for many financial institutions, and will extend this into the professional services domain.
- Around 60,000 additional regulated firms will become reachable under the FCA’s AML/CTF supervision (in addition to its existing population) reflecting the scale of the change.
- The decision remains subject to enabling legislation, funding arrangements, and a detailed transition and delivery plan.
- The FCA emphasises the need for close working with the PBSs, OPBAS, law enforcement, and the regulated firms to ensure a smooth transition.
Implications for the Legal Sector and Others
For the legal services sector (and other professional services), the reform has direct implications:
- Firms currently supervised by a PBS for AML/CTF will eventually move under the FCA’s supervisory regime for these obligations (though they will continue to be regulated (for other purposes) by their existing professional regulators.
- Representative bodies will no longer hold a regulatory supervisory role for AML/CTF under the Money Laundering Regulations, though they will retain non-regulatory roles in guidance, education and sector engagement.
- The legal sector will need to coordinate with the FCA on compliance, registration, reporting, risk-based supervision and enforcement implying perhaps a steeper regulatory learning curve for some firms accustomed to the previous regime.
Larger concern in the profession revolves around cost, regulatory burden, loss of sector-specific expertise and transitional disruption. The Law Society has voiced concern about the pace and complexity of change.
Advantages and Challenges of the New Approach
Advantages
- Consistency and clarity
- Risk-based supervision
- Stronger enforcement
Challenges
- Sector-specific knowledge
- Cost and burden
- Transition risk
- Loss of professional-body supervision
Relevance for the Practitioners
For solicitors, accountants, trust & company service providers (and their compliance teams), here are practical implications:
- Prepare for change
- Review current supervisory obligations
- Focus on risk-based compliance
- Engage with representative bodies
- Budget for potential costs
- Stay alert to transition plans
The UK’s decision to move towards a single professional services supervisor for AML/CTF signals a clear intent to strengthen defences against illegal finance, streamline oversight, and raise the standard of supervision across legal, accountancy and trust-company firms. While the pros of consistency, stronger enforcement and risk-based supervision are compelling, the success of the reform will depend heavily on the detail of transition, clarity of guidance, funding arrangements and the ability of the supervising body to retain sector-specific expertise.
For firms in the professional services world, the message is one of readiness, the supervisory landscape is shifting. Effective preparation now will ease the transition and position firms to operate confidently in the new regime.
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