Following the government’s decision to appoint the Financial Conduct Authority (FCA) as the future supervisor for AML/CTF compliance in legal, accountancy, and trust and company service providers, HM Treasury is seeking views on the powers, duties, and accountability mechanisms the FCA will need to be an effective supervisor.
Key proposals
The FCA could register all in-scope firms, conduct appropriate gatekeeping checks, and have powers to accept, deny, suspend, or cancel registrations. HM Treasury is seeking views on minor amendments to existing gatekeeping powers in the MLRs to harmonise and improve the system.
The FCA could also “police the perimeter”, by working to identify unregistered activity within scope of the MLRs and bring these businesses under supervision where appropriate. All firms supervised by the FCA could be listed in a public register, which would improve transparency and make it harder for bad actors to carry out high-risk activities without supervision.
The FCA could apply a consistent and coherent risk-based approach for each of the sectors it will supervise, maintaining up-to-date risk profiles and conducting targeted supervisory activity such as on-site and desk-based reviews. This would enable the FCA to build a strong understanding of risk across all professional services firms and ensure resources were allocated efficiently. The FCA could be able to require relevant information from firms, conduct inspections and exchange information where appropriate with domestic and international authorities.
HM Treasury is seeking views on minor additions to supervisory powers to allow the FCA to issue directions to firms or to require a firm to appoint a skilled person to conduct a review.
The FCA could provide up-to-date information to firms on AML/CTF risks and effective compliance with the MLRs. This could include responsibility for published guidance.
The FCA could carry out intelligence-sharing with law enforcement, other supervisors and authorities as appropriate, and support whistleblowing – all areas within the current system which have drawn criticism. An amendment has been proposed to improve the sharing of suspicious activity reports (SARs) between supervisors and the National Crime Agency.
The FCA could have the power (in relation to professional services firms) to impose civil penalties, suspensions, prohibitions and public censures, and to initiate criminal proceedings for breaches of the MLRs, in line with existing FCA and HMRC powers. This should support more dissuasive action against non-compliance with the MLRs.
The FCA’s use of its powers should be appealable to the courts, ensuring judicial oversight consistent with the current regime for the FCA.
Once established in its new role, it is proposed that the FCA funds its supervisory activity through fees charged to supervised firms on a cost-recovery basis, as they do with their current supervised population. HM Treasury is providing Economic Crime Levy funding for implementation.
Your views are invited on legislative provisions to ensure implementation of this reform does not create significant new burdens on firms; and that supervisors share information with each other to ease firms’ involvement with their regulators.
The FCA will continue to be operationally independent of HM Treasury and political control. It will remain accountable to HM Treasury and Parliament.
The consultation will close on 24th December 2025.
HM Treasury roundtables
HM Treasury is hosting a series of roundtables to facilitate meaningful discussion on the proposals set out in the consultation. The details are below including how to register: