After over two years of consultation and speculation, the UK government has confirmed a significant shift in the country’s anti-money laundering (AML) supervisory landscape. In a move designed to simplify and streamline oversight, HM Treasury has announced that the Financial Conduct Authority (FCA) will become the single professional services supervisor (SPSS), taking over responsibility for AML supervision across legal services, accountancy services, and trust and company service providers.
This marks a major departure from the current structure, under which AML supervision of professional services is fragmented across 22 professional body supervisors (9 for legal and 13 for accountancy) overseen by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
Once implemented, the FCA’s expanded remit will bring together around 60,000 regulated firms under a single supervisory authority.
A Simplifying Reform — at Least in Theory
HM Treasury has described this as a “simplifying reform”, emphasising that no changes are being made to firms’ obligations under the Money Laundering Regulations (MLRs). In other words, the move should not require operational changes for supervised firms; the rules remain the same, just the overseer will change.
However, for many professional services firms, the picture is not quite as simple. While AML supervision will shift to the FCA, firms will still remain accountable to their existing professional or regulatory bodies for conduct, ethics, and sector-specific compliance. In practice, this means that many firms will now report to two supervisors — the FCA for AML matters, and their professional body for everything else. This dual reporting structure could introduce new layers of coordination and complexity, at least in the short term, rather than the streamlined oversight the reform aims to achieve.
Building Expertise Across Diverse Sectors
While simplification is a welcome goal, the announcement has raised some valid concerns, particularly around expertise. The FCA is a well-established financial regulator, but professional services are markedly different from financial institutions in terms of structure, risk exposure, and culture. Many in the financial sector have already expressed concerns around a lack of domain-specific knowledge within financial services. Extending that model into the world of legal and accountancy practices, with their unique business models and client relationships, may prove challenging. The Treasury has stated that the FCA will “build expertise” in these new sectors, but doing so effectively – and quickly – will be key to ensuring confidence in the new regime.
The Challenge of Risk-Based Supervision
A central challenge for the FCA will be applying its risk-based supervision model across such a broad and varied population of firms. Professional services firms and financial institutions clearly have fundamentally different risk profiles; the nature of money laundering risk in a global bank handling complex international transactions is clearly not comparable to that faced by a small, local accountancy practice.
To be effective, the FCA will need to differentiate clearly between these sectors and calibrate its supervisory intensity accordingly. This will likely require new frameworks for assessing and comparing risk across industries with very different business models, client bases, and exposure to illicit finance. While consistency is a goal, proportionality will be essential – the FCA’s methods for large banks won’t be feasible for sole practitioners or small accountancy firms.
The forthcoming consultation period will play a crucial role in defining how the FCA intends to prioritise its supervisory focus and allocate resources proportionately across these distinct sectors.
Raising the Bar on AML Standards?
From a compliance standpoint, the change could provide an opportunity to strengthen oversight within the professional services sector. These firms have often been viewed as less advanced than financial institutions in the maturity of their AML and counter-terrorist financing (CTF) frameworks.
A single, centralised supervisor may help promote greater consistency and alignment with established regulatory expectations in financial services. However, whether a unified approach is truly practicable will depend on the FCA’s ability to adapt its supervisory approach to the specific characteristics of professional services firms, rather than applying a uniform model across all sectors.
Resources and Capacity
While the government’s objective is simplification, expanding the FCA’s remit to include tens of thousands of additional firms is a major undertaking. Much will depend on whether this structural streamlining is matched with additional funding and staffing. Without it, the FCA could find itself stretched too thin, diluting supervision standards rather than strengthening them.
What Comes Next
A public consultation is expected next month, focusing on the new powers the FCA will fulfil in its expanded role. However, professional services firms will not face immediate operational changes. The Treasury has been clear that the move does not alter existing AML obligations, and the consultation will provide further clarity on how the transition will unfold.
The transition period is likely to require careful coordination between OPBAS, existing professional bodies, and the FCA to avoid supervisory gaps or duplication during handover. New statutory instruments may be required to formalise the FCA’s new powers, which could affect timing and scope.
Nevertheless, the announcement represents an important signal of intent – a step toward greater consistency and centralisation in the UK’s AML framework. If executed effectively, it could help drive up standards across the professional services sector and bring much-needed coherence to a system that has long been criticised for fragmentation and uneven oversight.
But as ever in compliance, the devil will be in the detail — and the industry will be watching closely to see how the FCA manages its expanded role.
How Cosegic Can Help
At Cosegic, we have extensive experience supporting firms in navigating the FCA’s supervisory approach – not just understanding the letter of the regulations, but interpreting the regulator’s broader expectations and priorities. As the FCA prepares to assume responsibility for AML supervision across professional services, now is the time for firms to assess how this shift could affect their oversight, reporting, and engagement with regulators.
If your firm would like to discuss what these changes may mean in practice, gain insight into the FCA’s evolving supervisory focus, or receive tailored guidance on preparing for the transition, please get in touch with our regulatory specialists.
