HM Treasury consultation outcome on reforming anti-money laundering and counter-terrorism financing supervision

HM Treasury has published its consultation response document on reforming the anti-money laundering and counter-terrorism financing (AML/CTF) supervisory system, following its June 2023 consultation paper setting out its proposed reforms in this area.  

The anti-money laundering and counter-terrorism financing supervisory system currently comprises three statutory supervisors: the FCA, the Gambling Commission and HMRC, and 22 private sector professional body supervisors that supervise the legal and accountancy sectors. These supervisors ensure firms and individuals comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and take enforcement action for breaches.  

Having consulted on four possible models for a future regime, HM Treasury has decided to create a single professional services supervisor, which will have consolidated responsibility for anti-money laundering and counter-terrorism financing supervision of legal, accountancy, and trust and company service providers.   

The FCA will assume this role and will carry out the supervisory functions as part of its remit. It will supervise all firms that carry out activities within scope of the 2017 Regulations as legal service providers, accountancy service providers, and trust and company service providers.   

HM Treasury notes that professional services supervisory bodies are expected to continue in their wider regulatory and representative roles, including overseeing professional standards. The Office for Professional Body Anti-Money Laundering Supervision will no longer be needed.  

The policy change will require legislation, funding arrangements and a transition and delivery plan, and is likely to take some time. It marks a significant change in the FCA's role and will require it to develop an understanding of the operation and risks of the legal, accounting and company service sectors.  

In terms of next steps:  

• The FCA is developing a detailed plan for carrying out this role and it confirmed in a statement that it will engage with HM Treasury, HMRC, the professional bodies and firms on the transition.
• HM Treasury will publish a separate consultation in November 2025 on the powers the FCA will need as the single professional services supervisor. It will also work with current supervisors on a phased approach to transitioning firms to the FCA.
• The FCA cannot take up its new role until enabling primary legislation has been passed. HM Treasury notes that this will be dependent on parliamentary time.