BREAKING NEWS: The FCA to Become AML Supervisor for Legal Services – What Does This Mean?
As announced today, Tuesday 21 October 2025, the transfer of all anti-money laundering (AML) responsibilities has moved to the Financial Conduct Authority (FCA) – effectively removing the Solicitors Regulation Authority (SRA) from its role overseeing and regulating UK law firms in this area.
The UK Government, through Chancellor Rachel Reeves, confirmed that the supervision of AML compliance will now be handled by the FCA, which will act as the Single Professional Services Supervisor (SPSS). This marks a significant shift in UK legal regulation, with the FCA taking over the SRA’s previous responsibilities in AML oversight.
What the Change Involves
Under this reform, the FCA becomes the sole professional services supervisor for AML across sectors including legal services, accountancy, and trust and company service providers (TCSPs). Referred to as the “City watchdog,” the FCA will establish a dedicated AML supervision team to work alongside law enforcement agencies and other professional regulators. The objective is to strengthen the UK’s defenses against money laundering and financial crime.
However, these changes remain subject to enabling legislation, funding arrangements, and a detailed transition plan. It has not yet been confirmed when the FCA’s supervisory role will officially take effect.
The SRA’s Previous Role in AML Compliance
Since 2007, the SRA has been responsible for AML regulation within the legal sector, with its powers expanded in 2017 through the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. These regulations required law firms to implement firm-wide risk assessments, maintain robust AML policies and procedures, and ensure compliance across all solicitor firms nationwide. The SRA’s oversight included regular monitoring and enforcement where breaches occurred.
Why the Government Is Making the Change
According to the government, consolidating AML supervision under one regulatory body will reduce fragmentation, increase consistency, and streamline compliance across sectors. By centralising responsibility within the FCA, a well-resourced regulator with data-driven experience, the UK aims to strengthen its anti-money laundering framework and promote a unified approach to financial crime prevention across industries.
What This Means for Solicitors and Law Firms
For solicitors and legal professionals, this transition represents a major change in compliance oversight. While the SRA will no longer oversee AML compliance, firms remain fully bound by the Money Laundering Regulations 2017. The FCA’s supervision approach is expected to be more data-driven, risk-based, and proactive, bringing stricter reporting requirements, increased scrutiny, and more rigorous enforcement.
Law firms should ensure that:
• AML policies and procedures remain compliant and up to date.
• Firm-wide risk assessments are regularly reviewed.
• Staff receive continuous AML and counter-terrorist financing (CTF) training.
• Records are properly maintained to demonstrate compliance.
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Looking Ahead
This shift to FCA supervision marks the most significant structural reform in AML oversight for the legal profession in more than a decade. While the aim is to improve consistency and public confidence, questions remain over whether a centralised FCA model can fully account for the unique compliance challenges within legal practice.
Until the transition is complete, law firms must continue to follow SRA guidance and maintain robust AML compliance to minimise risk and protect clients.
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