The Financial Conduct Authority (FCA) is preparing for one of the biggest shake-ups to the UK’s anti-money laundering (AML) regime in years, after the government confirmed it will become the sole supervisor for anti-money laundering and counter-terrorist financing (AML/CTF) across the legal and accountancy sectors. The change, known as the Single Professional Services Supervisor (SPSS) model, will strip professional body supervisors (PBSs) such as the Solicitors Regulation Authority (SRA), the Institute of Chartered Accountants in England and Wales (ICAEW) and roughly twenty other sectoral bodies of their AML supervisory powers, transferring responsibility for around 60,000 legal and accountancy firms to the FCA.

Although the government confirmed its decision back in October 2025, the transfer will not begin until the end of 2028, with a phased handover expected to run for around two years, meaning the remaining professional body-supervised businesses should have moved across by 2030. A phased transfer of supervision is expected to begin in late 2028, by which point the FCA plans to have its initial systems built and tested, with the remaining professional body-supervised businesses expected to transfer by 2030. Firms currently overseen by a PBS should carry on as normal in the meantime; the regulator has said there will be no immediate change for affected businesses because the reforms depend on new legislation being passed, and firms should continue to follow their existing AML arrangements and deal with their current supervisor.

Why the change is happening

The reform has been years in the making. HM Treasury’s 2022 review of the UK’s AML and counter-terrorist financing regulatory and supervisory regime concluded that, while there had been iterative improvement, structural reform may be needed. That review set out four possible models, ranging from strengthening the existing Office for Professional Body AML Supervision (OPBAS) to creating a single supervisor for all sectors. The government has ultimately chosen the Single Professional Services Supervisor model, giving the FCA full responsibility for AML supervision of professional services, marking a significant centralisation of oversight.

Speaking at the Law Society Economic Crime Conference in September, Steve Smart, the FCA’s executive director of enforcement and market oversight, set out the regulator’s case for taking on the role. He acknowledged the obvious scepticism that a regulator built for banks and asset managers could really understand the legal and accountancy sectors well enough to supervise them effectively, calling it a fair question, before pointing to the FCA’s multidisciplinary make-up, which includes almost 400 practising lawyers. Responding to the government’s original decision, Smart struck an emollient tone towards the sector, saying the FCA recognised the benefits of an improved regime, that the changes would simplify the supervision of professional services, ensure more consistent oversight and help identify and disrupt crime, and that the regulator would work closely with government, OPBAS, professional bodies, HMRC and the firms it will supervise to deliver a smooth transition.

The promised benefits

Supporters of the reform point to the sheer fragmentation of the current system as its biggest weakness. Oversight of AML compliance is currently fragmented and inconsistent, with HMRC, the SRA and no fewer than 22 sectoral supervisors, spanning accountancy bodies such as the ACCA, ICAEW and ICAS and legal bodies including the Law Society, Bar Council and CILEx Regulation, all acting as AML supervisors. A single supervisor is intended to close the gaps that inconsistent standards can create, apply a more intelligence-led, risk-based approach across the board, and give law enforcement a single point of contact for information sharing. The FCA has also highlighted its record of using industry feedback to sharpen its focus, citing its decision to raise the threshold for Defence Against Money Laundering Suspicious Activity Reports after industry complained the old limit generated too many low-value reports and tied up resource.

For firms that operate across both legal and accountancy disciplines, or that currently answer to more than one PBS, a single supervisor should in theory mean one set of expectations, one reporting relationship and less duplicated administrative burden. HM Treasury has also indicated it intends to extend the FCA’s existing powers under the Money Laundering Regulations 2017 rather than invent an entirely new statutory framework, which should limit the amount of wholly new law firms need to get to grips with.

Stumbling blocks and grey areas

Not everyone is convinced. Professional bodies have warned that removing sector-specific supervisors risks losing exactly the specialist knowledge that made them effective in the first place. The Association of International Accountants has argued that professional body supervision, with its detailed understanding of the accountancy profession, has proved effective, and that the move risks weakening rather than strengthening the UK’s defences against financial crime. A related concern is capacity: whether an organisation that currently regulates financial services firms can realistically absorb 60,000 new entities without diluting the quality of supervision, particularly in the early years while its own systems and expertise are still being built.

Dual regulation is another frequently raised worry. Because the SRA, ICAEW and equivalent bodies will retain responsibility for professional conduct, accounts rules and disciplinary matters even after AML supervision transfers, firms could find themselves answering to two regulators with overlapping requirements. The Association of Chartered Certified Accountants has warned that the change risks firms facing dual supervision and dual fees, since they will still answer to their professional body for ethical standards while also meeting potentially intrusive FCA fit-and-proper requirements. Cost is bound up in this concern too: initial set-up costs will be met through the Economic Crime Levy, but once the new regime is operational it will be funded by fees charged directly to the firms it supervises, and the FCA has yet to consult on how those charges will be structured.

There are also practical grey areas around timing and continuity. Legislation still needs to pass through Parliament, meaning the precise start date remains contingent on the parliamentary timetable, and firms have been told to keep dealing with their existing supervisor until formal notice is given. Watchdogs monitoring the transition have separately cautioned that professional bodies must not ease off in the meantime. A recent OPBAS report found that supervisors are still not doing enough to engage their populations and ensure firms understand what AML compliance requires, warning that moving supervision to the FCA poses a risk that professional bodies do even less to inform firms during the transition, while it remains unclear how successful the FCA will be in picking up the slack.

For firms in scope, the sensible approach for now is to keep meeting existing obligations under the current supervisor, watch closely as legislation and consultations on FCA powers and fees progress, and begin thinking early about how a single, more intelligence-led supervisor with fit-and-proper checks might change day-to-day compliance once the transfer eventually arrives.