Following a 2023 Treasury consultation into reforming AML-CTF supervision, the UK government has confirmed the FCA will assume sole AML supervisory responsibility for professional services by 2026.
This means that the Financial Conduct Authority (FCA) will become the single professional services supervisor for anti-money laundering and counter-terrorism financing (AML-CTF). The supervision change will affect a wide range of professional services and regulated businesses, including:
- Accountants and tax advisors
- Trust and company service providers (TCSPs)
- Estate agents and letting agencies
- High-value dealers and Art Market Participants
- Solicitors and Independent Legal Professionals
If your business sits under the new FCA AML supervision, the best time to get ready is before a review lands in your inbox. In reality, FCA supervision tends to focus on the same question every time: can you show, with evidence, that your AML controls work in practice?
The details vary, but the FCA is always looking for the same core basics: risk, due diligence, ongoing monitoring, and governance.
In follow up to our previous blog, ‘What The AML Supervision Reforms Mean For Regulated Businesses’, our AML Compliance team sets out what FCA AML supervision usually involves, and what you can do now to make sure you’re not scrambling later.
FCA AML supervision isn’t about whether you have a policy document saved somewhere. It’s about whether your business has:
What FCA AML supervision is actually testing
- identified where your money laundering and terrorist financing risks sit
- put controls in place that match those risks
- applied those controls consistently
- kept a clear record of decisions and actions
The FCA will want to see that your approach makes sense for your business, and that staff understand how to follow it day to day.
Why preparation matters
Supervision can be disruptive if you are trying to “pull everything together” at the last minute. The bigger issue, though, is what poor preparation can signal. If files are inconsistent, risk assessments are vague, or due diligence is incomplete, the FCA is likely to see a control problem rather than an admin problem.
Good preparation helps you:
- spot gaps early
- reduce the chances of an uncomfortable regulatory outcome
- make supervision feel like a structured review, not an interrogation
- protect your reputation with partners, banks, and customers
What Will the FCA Focus On?
It will likely be some time before any significant changes take effect, and the transition to the FCA oversight will need to be phased through legislation. However, regulated businesses and professional services should take this time to prepare for potential changes, which may include a more rigorous approach to:
- Your Firmwide Risk Assessment
Your risk assessment should read like a clear summary of how your business operates and where it could be exploited.
That means it should cover things like:
- who your customers are and how you onboard them
- what you sell and how funds move
- where you operate, including any higher-risk jurisdictions
- delivery channels and third-party relationships
- how you’ve decided what “higher risk” looks like in your world
The FCA will expect it to be current, usable, and reflected in your actual decisions. If your risk assessment says one thing but your files show another, that mismatch stands out quickly.
- Customer Due Diligence Procedures
CDD is one of the first places supervision teams look, because it is easy to test. They will check whether you can show, for each relevant customer:
- what you collected (ID, ownership details, source of funds where relevant)
- how you verified it
- why you assessed the risk level the way you did
- when enhanced due diligence was triggered, and what you did next
If your business struggles with capacity here, or if due diligence is eating into fee-earner time, there is a practical alternative. RACO’s Due Diligence & Risk Assessment Service is built as an outsourced solution where we collate and verify KYC documentation, undertake CDD and EDD where needed, and prepare the transaction risk assessment report for your internal team to review and approve.
In other words, the work gets done properly, and your compliance function can focus on oversight rather than chasing documents.
- Ongoing Monitoring and Record Keeping
A common weakness in supervised firms is treating AML as a one-time onboarding task.
The FCA will look for evidence that you:
- keep CDD up to date
- monitor activity and changes in risk
- record why decisions were made (not just what was done)
If something has been escalated internally, the paper trail matters. Clear records make your decisions defensible.
- Policies, controls, procedures, and training
This is where supervision gets real, because it is where written frameworks meet actual behaviour.
The FCA will look at:
- whether your policies reflect your business model and risk profile
- whether procedures are followed consistently
- how staff are trained, and whether training is relevant to their role
- whether your MLRO / nominated officer has proper oversight
If you need a full compliance refresh or ongoing support, RACO’s Money Laundering Regulations (AML) 2017 Compliance services covers the wider requirements: policies and controls, firmwide risk assessment, register management, training for MLRO and staff, independent audit support, and more.
What To Expect During a Supervision Review
Supervision usually involves information requests and document reviews. If you can produce the following quickly, you’re already in a stronger position:
- your firmwide risk assessment
- AML policies and procedures
- a set of customer files showing consistent CDD/EDD
- records of ongoing monitoring and reviews
- training logs and evidence of oversight
A well-prepared firm can answer questions calmly, because the evidence is already there.
If issues are identified, the FCA typically expects a remediation plan. In practice, a sensible, well-documented plan delivered quickly can make a real difference to how a review concludes.
How we help regulated businesses prepare
If you’re worried your AML controls would not stand up well under scrutiny, you are not alone. Most problems we see are not about a lack of intent. They are about time, capacity, and systems that have not kept pace with regulatory expectations.
We can help businesses:
- Review AML policies and procedures to ensure they align with FCA expectations, especially around risk assessments and customer due diligence.
- Train your team to ensure staff understand the FCA’s approach to their obligations, including suspicious activity and reporting.
- Provide outsourced compliance services, including:
- Outsourced Due Diligence & Risk Assessment: We carry out the due diligence work and prepare risk assessments, so your internal team can focus on review and oversight.
- Anti Money Laundering (AML) Compliance Service: This support service has been designed to provide AML regulated businesses with an effective solution for the management and control of compliance with the Anti Money Laundering Regulations. Our service is an annual subscription that provides Businesses with ongoing support from our compliance team and ensures your Business has in place appropriate and compliant Policies, Controls and Procedures (PCP’s) that are maintained by us.
- Risk, Anti Money Laundering Guidance and Register Administration Service has been designed to provide Businesses and their Money Laundering Reporting Officer (MLRO) with a support function that ensures their regulatory and compliance obligations are fulfilled on an ongoing basis and staff are provided access to ongoing advice as needed.
Until the change takes place, businesses are highly recommended and expected to follow the guidance of their current supervisor to continue to ensure they meet all obligations and guidance provided.
There is clearly a lot of work still to be done to affect the new arrangements, and any changes are unlikely to happen soon.
If you want to sense-check where you stand before supervision, we can talk it through and help you decide what needs attention first.
Talk to our Compliance experts
At Regulation & Compliance Office, we work with businesses to create the necessary documentation and have the processes in place to ensure the business and its staff are thoroughly protected.
To enquire about our services and how we can service your business, call us on 0203 985 8550 or email us at info@regulationandcomplianceoffice.co.uk
