UK AML 2025: Supervision Reforms and Regulatory Shakeup
In October 2025, the UK government announced a major overhaul of anti-money laundering (“AML”) supervision.
The Financial Conduct Authority (“FCA”) will become the sole AML supervisor for legal, accountancy, and trust and company service providers, consolidating responsibilities previously held by 23 Professional Body Supervisors (“PBSs”).
This reform, described as a “blitz on bureaucracy,” aims to streamline oversight and strengthen enforcement across approximately 60,000 firms.
A consultation launched in November 2025 seeks to define the FCA’s expanded powers, duties, and fee structures, with implementation expected in early 2026.
To change is to improve, however the shift towards a single regulator has many sectors concerned about lack of sector specific knowledge, rise in compliance costs, and a greater burden with little clarity on implementation.
The Solicitors Regulation Authority (“SRA”), which has historically supervised law firms under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLR 2017”), confirmed it will relinquish this role and work closely with the FCA during the transition.
Despite its strong enforcement record in 2024–2025, including hundreds of AML audits and significant fines, the SRA will shift to a non-supervisory position. The Law Society will continue to provide guidance and education, but without regulatory authority. This change raises concerns about the potential loss of sector-specific expertise, which many argue is critical for effective AML oversight in professional services.
The Office for Professional Body Anti-Money Laundering Supervision (“OPBAS”) was established in 2018 to oversee PBSs, which include accountancy and legal sector bodies. Its purpose was to ensure consistency in AML supervision, improve collaboration and intelligence sharing, and provide enforcement capability to underperforming PBSs to enhance their systems or face penalties. In October 2025, the government decided to wind down OPBAS as part of a wider reform to consolidate AML supervision. Responsibility for these functions will transfer to the FCA, and OPBAS will cease operations once the FCA assumes full responsibility.
His Majesty’s Revenue and Customs (“HMRC”)’s role will remain largely unchanged. It will continue supervising high-risk sectors such as money service businesses, estate and letting agents, high-value dealers, art market participants, and casinos (for money service business activities).
Alongside these structural changes, HM Treasury published a draft statutory instrument in September 2025 proposing tighter rules on pooled client accounts, cryptoasset transactions, and trust registration, as well as stricter customer due diligence requirements.
Businesses subject to MLR 2017 must prepare for these amendments, which are expected to come into force following parliamentary approval.
For firms, these developments mean significant adjustments. The FCA’s approach is risk-led and outcome-focused, moving away from tick-box compliance. Businesses will need to invest in robust governance, dynamic “Know Your Client” processes, and real-time monitoring systems to meet heightened expectations.
Legal and accountancy firms should begin transition planning now, conduct gap analyses against the draft regulations, and engage with consultations before they close in December 2025.
Training and internal awareness will be essential to ensure compliance under the new supervisory regime.
In summary, 2025 marks a turning point for UK AML regulation.
The FCA’s consolidation of supervisory powers, the withdrawal of the SRA from frontline oversight, and HMRC’s continued role signal a more centralized and stringent compliance environment.
Firms that adapt early, by strengthening controls and aligning with evolving regulatory standards, will be best positioned to navigate the challenges of 2026 and beyond.
Firms should be proactive rather than reactive as the FCA’s oversight will likely mean businesses failing to meet standards will face faster escalation, thematic reviews and potentially significant enforcement actions.
