HM Treasury has promised to press the Financial Conduct Authority to keep the transfer of anti-money laundering supervision for law firms as smooth as possible, after acknowledging concerns that solicitors could face duplication, uncertainty and heavier compliance demands once the FCA assumes the expanded role.
The move follows the government’s consultation response on shifting powers from the Solicitors Regulation Authority and other professional body supervisors to the FCA.
Treasury minister Rachel Blake said the reform was central to the UK’s wider effort to combat money laundering, while insisting that new powers should be proportionate and should not create unnecessary burdens for firms already subject to professional regulation.
That assurance will matter to law firm leaders because AML supervision is no longer a back-office risk issue; it now reaches client onboarding, matter risk assessment, conveyancing controls, private client work, sanctions screening and board-level compliance reporting.
Regulatory context is important here because the legal profession already operates under the Money Laundering Regulations 2017, with criminal exposure sitting alongside the Proceeds of Crime Act 2002 and the Terrorism Act 2000.
The SRA has increased its AML enforcement activity in recent years, while the FCA already has a wider financial crime supervisory culture through its work with regulated financial services businesses and the Office for Professional Body Anti-Money Laundering Supervision. The government’s challenge is to move legal sector AML supervision into that framework without creating two competing centres of authority over the same firms.
The Law Society and respondents to the consultation have raised concerns about law firms appearing on multiple statutory registers, the risk of confusion for clients and the possibility that FCA “fit and proper” checks could overlap with existing solicitor fitness and propriety assessments.
Some respondents supported the idea of an FCA-maintained register of firms within scope of the Money Laundering Regulations, but argued that data should be passported automatically from the SRA wherever possible. The Treasury response said structured information-sharing between the FCA and current professional body supervisors would be used to reduce duplication.
The timing is still unresolved. The government has not said when the FCA will take over legal sector AML supervision, and the change will depend on both primary and secondary legislation, which means firms are unlikely to see an immediate switch in day-to-day obligations. That should not be read as a reason to wait.
For compliance officers, COLPs and managing partners, the consultation response is a clear signal to test whether AML controls are genuinely working across client onboarding, file reviews, risk assessments and internal reporting. The direction of travel points toward closer information-sharing between the FCA and SRA, with law firms expected to evidence practical compliance rather than rely on policies that sit untouched in a manual.
The FCA, HM Treasury, the SRA and the Law Society will now be watched closely by law firm management as the legislation develops, because the practical burden will fall on compliance officers who must prove AML systems work before the new supervisory model arrives.