FCA Signals Intelligence-Led AML Supervision of 60,000 Legal and Accounting Entities from 2028

Key Takeaways

• In a speech at the Law Society Economic Crime Conference, the FCA's Steve Smart confirmed the regulator will begin AML supervision of roughly 60,000 legal and accounting sector entities at the end of 2028.
• The FCA promises a risk-based, proportionate, technology-enabled approach focused on criminals and professional enablers rather than compliant firms.
• Compliance teams in these sectors, and financial institutions that serve them, should begin preparing for a shift in supervisory expectations and in how they engage with the regulator.

Deep Dive

In a speech at the Law Society Economic Crime Conference, the FCA's Steve Smart confirmed the regulator will begin AML supervision of roughly 60,000 legal and accounting sector entities at the end of 2028. The FCA promises a risk-based, proportionate, technology-enabled approach focused on criminals and professional enablers rather than compliant firms. Compliance teams in these sectors, and financial institutions that serve them, should begin preparing for a shift in supervisory expectations and in how they engage with the regulator.

The FCA outlined three strengths it will bring to the role. First, it will tailor its approach to firm size and sector rather than apply a one-size-fits-all model, concentrating on whether core AML controls are effective for the risks each firm presents, with limited requests and paperwork. Second, it will use intelligence-led, proactive detection and disruption. As an example, it cited its work on Annex 1 firms, where it identified weaknesses such as over-reliance on parent company controls and complex lending structures. Its response included information gathering, closer scrutiny of new applications, risk-based prioritization, and supervisory and enforcement action. Third, it will use technology, including AI. Its systems process over 56 million records daily, and it is exploring agentic supervision. It stressed that AI will support, not replace, human judgment.

Other points bear on current practice. The FCA backs the NCA's data fusion programme and the information-sharing gateways in the Economic Crime and Corporate Transparency Act. It also referenced nine financial crime priorities published last year, and the raised Defence Against Money Laundering SAR threshold of £3,000, which has reduced low-value reports. It cited a planned £100 million annual reduction in firm costs from transaction reporting changes as an example of its burden-reduction aim, though that example comes from a different sector. The FCA warned that the minority of firms and professionals who enable crime should expect to be found and face consequences.

Legal and accounting firms should review their business-wide risk assessments, customer due diligence, monitoring, and SAR processes against the Money Laundering Regulations, and ensure they are well documented and risk-proportionate. They should also track the nine financial crime priorities, engage with their Professional Body Supervisor and FCA outreach, and consider contributing views as the FCA requested. Regulated financial institutions should evaluate the use of information-sharing provisions, review exposure to professional enablers and client-account relationships with law and accountancy firms, and ensure SAR thresholds and processes reflect the £3,000 change. Firms should also expect heightened data requests and more scrutiny of weak controls.

The main risks are regulatory transition, as supervisory methods, reporting requests, and enforcement posture will change after 2028. Firms with weak controls, reliance on group-level controls, or complex structures face higher enforcement risk. Those with strong, evidenced controls should see proportionate treatment. Because the specifics (fees, rules, data requirements) are not yet set, firms should monitor consultations and FCA publications closely.

Source: Financial Conduct Authority