The UK Government has confirmed plans (opens a new window) to transfer responsibility for anti-money laundering (AML) supervision of solicitors from the Solicitors Regulation Authority (SRA) to the Financial Conduct Authority (FCA).
This is a significant development for the profession and forms part of a broader programme to strengthen the UK’s defences against financial crime. The decision follows last year’s consultation on reforming AML supervision across the regulated sectors.
The reform options
When the consultation was launched, four possible models were outlined for comment:
Enhanced role for OPBAS
The first option was to expand the powers of OPBAS (the Office for Professional Body Anti-Money Laundering Supervision), which already oversees professional body supervisors. Some respondents questioned whether giving OPBAS additional authority would be effective, given that its existing powers have not always been fully utilised. There was also concern about regulators taking action simply to “be seen” to comply, rather than driving meaningful improvement.
Fewer supervisors in each profession
Another proposal involved reducing the number of AML supervisors across the legal and accountancy sectors – effectively consolidating supervision within bodies such as the SRA and Bar Standards Board. The Law Society supported this approach, citing the progress already made with the SRA and the benefits of working with a regulator familiar with the legal environment.
A single regulator for professional services (selected)
The option ultimately chosen is the creation of a single AML supervisor for professional services, which will be the FCA. The alternative candidate, HMRC, was discounted due to its wide remit and comparatively limited engagement with AML supervision to date.
A single cross-sector regulator
The most radical proposal – one “super-regulator” for all sectors, similar to arrangements in Australia – was deemed too extensive to implement at this stage.
Why change is happening
The UK is preparing for its next Financial Action Task Force (FATF) evaluation, which assesses the country’s effectiveness in tackling money laundering. The Government wants to demonstrate a coordinated, risk-based, and consistent approach across all regulated professions.
After eight years of oversight by OPBAS, there are still concerns about the consistency and robustness of supervision in some professional sectors. Moving responsibility to the FCA is intended to address this.
Legislative changes will be required before the transfer can take effect. These will need to clarify which aspects of compliance fall to the FCA and which remain with the legal regulators – particularly issues such as client account management and professional ethics, which sit at the intersection of AML and broader regulatory duties.
What the change means for law firms
The FCA is an experienced and assertive regulator with a well-developed compliance culture. Its approach focuses on testing effectiveness, not merely confirming the existence of policies or procedures.
For firms, this means:
Demonstrating that AML controls work in practice.
Monitoring compliance on an ongoing basis – not only when something goes wrong.
Evidencing how breaches are identified, escalated, and addressed.
Ensuring consistent supervision and consequences for non-compliance.
The legal profession will need to align more closely with the FCA’s expectation of continuous assurance – an approach familiar to financial institutions but newer to many law firms.
Insurers will also expect firms to keep abreast of, and comply with, legislative and regulatory change.
Preparing for the transition
The transition won’t happen overnight, but firms should begin reviewing their arrangements now.
Key actions include:
Assessing AML policies and procedures for effectiveness, not just adequacy.
Strengthening file review and supervision processes to ensure they operate consistently across all teams.
Using internal audits and compliance monitoring to test that systems are working as intended.
Building a culture where “compliance that works” is not just a phrase but a measurable reality.
As per guidance from Teal Compliance (opens a new window), effective compliance is about outcomes – not just documentation. The goal is to demonstrate that the risks your controls are designed to manage are not materialising elsewhere in the business.
Opportunities for the sector
While the move may not have been the profession’s preferred outcome, there are potential advantages:
The FCA’s structure may deliver greater clarity and consistency in expectations.
The legal and accountancy sectors will have a fresh opportunity to engage with the FCA to help it understand how professional practices operate.
There may also be a chance to update sector-specific guidance. In financial services, industry-led groups such as the JMLSG (Joint Money Laundering Steering Group) draft guidance rather than the regulator itself — a model that could bring more practitioner involvement to future legal sector guidance.
Next steps
The government intends to consult on the FCA’s supervisory powers in November, followed by a period for review and legislative development. Implementation will therefore take time, but firms should use the coming months to ensure their AML programmes are robust and evidence-based.
In summary
The transfer of supervision to the FCA is intended to raise standards and increase consistency. For law firms, it is an opportunity to strengthen AML frameworks, embed effective controls, and demonstrate genuine commitment to preventing money laundering.
As the legal sector steps into this next phase of regulation, firms that can evidence compliance that works will be best placed to adapt with confidence.
This article has been produced in collaboration with Teal Compliance.
