AML for professions: preparing for transition to FCA regulation
Calum MacLean, risk manager at Miller Insurance Services, discusses practical strategies law firms can use to ensure robust anti-money laundering (AML) protection in a shifting regulatory context
Since the surprise announcement in November 2025 that the Financial Conduct Authority (FCA) is almost certain to become the new AML regulator for professional services providers (PSPs), such as solicitors, conveyancers, and accountants, there has been a lot of speculation about the implications for impacted professionals.
While the outcome from the recent government consultation regarding the planned changes is still outstanding, there will inevitably be a transitional period. However, that is not a reason to rest on your laurels.
Law firms that prepare now will be much better placed to avoid regulatory censure in the future.
Miller’s Risk Benchmarking Report (2025) identified AML regulation and compliance to be one of the top concerns of risk and compliance professionals. Not only does the regulatory context change with incredible frequency, but the regulatory focus on AML has also meant:
- Increasing numbers of inspections
- Increasing numbers of non-compliances reported
- More frequent and higher fines
There is clearly room for improvement in AML compliance by firms and, given that the FCA can impose much higher financial penalties for serious breaches, it makes sense to proactively address any issues now.
The FCA’s approach to AML regulation
We can expect the FCA to take a much more data-driven approach than other professions’ regulators take, such as the Solicitors Regulation Authority (SRA). Firms will likely have to submit a larger and more specific set of data, with absolute deadlines for submission.
Data sets the FCA is likely to collect include:
- Number of transactions by type in period, both opened and completed
- Financial values
- The number of high-risk jurisdiction clients and transactions
- The total number of clients you have completed AML checks for in the year
- Source of funds data
- The number of sanctions matches and false positives
Based on its current approach, we can expect that the FCA will require all data fields to be completed to enable submission. Gaps in data and guesswork are liable to lead to regulatory censure — ‘if it isn’t recorded, it didn’t happen’.
As long as data submissions are timely, accurate and complete, and do not flag particular concerns, professional firms may have less interaction with their regulator than they currently do. With its data-led approach, much of the FCA’s action is driven through coordinated, thematic reviews.
The FCA has a very structured approach to guiding firms. The handbook is large but structured to help firms see what is most applicable to them, with updates being recorded so the chronology of changes is easy to understand. The guidance provided by the FCA is typically viewed as clearer, more consistent and more prescriptive than some others.
Impact of regulatory change on your business
Regulators that face the removal of their AML role may well shift their focus to other areas — for example, conflicts, conduct and ethics. There is a concern amongst many professionals that their existing regulators will use breaches in the AML regulations detected by the FCA as the basis for breaches under the remaining rules. For instance, regarding a breach of AML regulations as a de-facto breach of conduct rules.
Whether or not your existing (AML) regulator maintains a watching brief on AML processes, there is a real risk that if, in future, the FCA identifies some process failure in relation to AML (and that process failure also has wider implications for your professional practice), that will result in regulatory action by more than one regulator. In effect, double regulation.
The FCA is looking towards a permissions regime where both firms and individuals will be authorised from an AML perspective. This will bring individual responsibilities to the fore and raise the stakes for individuals in a firm.
5 practical steps to consider
- Start planning now.
- Keep abreast of new information as it becomes available. Find trusted people who provide regular information updates that will help inform your decision-making.
- AML regulation is not changing. Review the findings of the SRA’s latest AML Report to identify common themes to look out for.
- Undertake a review to make sure that your policies, processes and procedures fully comply today with the existing regime. That will reduce the work you have to do down the line to ensure you are compliant with the new regulator’s requirements.
- Audit your practice management and AML systems to ensure that they are capturing or can capture the data you are likely to need. Where you are relying on third party data, ask for details about their data sources and how they ensure accuracy. Make sure you are capturing the right information, for example, your onboarding processes should be able to demonstrate meaningful compliance with your firm-wide risk assessment.
Miller recently co-hosted a workshop event focused on this topic.
If you would like to discuss your firms’ transition to FCA regulation, get in touch with Miller‘s Risk Manager, Calum MacLean (Calum.MacLean@miller-insurance.com).
