Late last year, the professional services sector was surprised by the announcement that the government is reforming the current anti-money laundering (AML) regime, making the Financial Conduct Authority (FCA) the single supervisor for professional services.
Currently, the AML finance policies of 60,000 professional services businesses across the UK are overseen by 23 different supervisors, including the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in England and Wales (ICAEW).
The government says the reforms will “address deficiencies” in a regime that is currently “complex and disjointed”, resulting in a new system that is “cohesive and easily navigable for professional services firms”.
But this new approach is likely to make life much more difficult for accountants up and down the country, increasing costs and regulatory burdens. So, do we really need reforms? Well, many in the profession, including the ICAEW and ACCA, have expressed significant reservations.
This is not the first time we have heard of AML reforms. The government first published a review of the UK’s AML regime in 2022, and its consultation setting out proposed reforms was published in June 2023, so the industry has waited three years for an update - and the outcome has left many disappointed.
Now, the implementation of these changes is likely to be just as time-consuming. Even the government itself has said that the timing of the change is “heavily dependent on the availability of parliamentary time” due to the fact that the implementation of the policy is subject to “the passing of enabling legislation, confirmation of funding arrangements and the development of a detailed transition and delivery plan”.
It’s going to take a long time to introduce the legislation needed to give the FCA powers to supervise lawyers and accountants, and it’s likely to take some time to wind up the existing supervision too. Then, once the new regime is in place, the time burden is likely to be passed onto accountants themselves. The FCA produces extensive guidance for other sectors that it currently supervises, so it looks like accountants will now get the same, creating extra work for them as they have to carefully follow a vast amount of new guidance.
Accountancy services are at a high risk of money laundering, with criminals targeting the profession because of the trust, legitimacy and access to the financial system that it provides, so the silver lining of all this is that accountants will be held to a higher standard, potentially stopping criminality in its tracks.
However, the reforms still present significant feasibility challenges for the government, the FCA and individual accounting groups, and it also means there will be valuable existing expertise lost among those who work for the current 23 supervisors. It is those professionals who will perhaps be the most negatively affected.
There is currently a question mark around the funding behind these AML reforms. The transition is undoubtedly going to be a costly one, as shifting away from a system run by professional organisations with industry expertise and proven procedures will require substantial investment.
There is speculation that the government will fund the transition from the Treasury out of general taxation. However, there’s also the possibility that the accounting businesses being supervised will need to pay a levy of some sort to the FCA.
If this is the case, there will be an unwelcome additional cost for accountants, making business growth more challenging at a time when business confidence is already low. Business sentiment deteriorated further into negative territory in Q3 2025, according to the ICAEW, with increased pessimism underpinned by concerns over tax burdens and above-average inflation.
In early November, the government published a separate consultation, which set out proposals for the key duties, powers and accountability mechanisms that the FCA will need to be an effective supervisor. The consultation closed on 24 December and we’re now waiting for the outcome to be announced.
In the meantime, accountants can get ahead by preparing for the systematic, data-driven approach that the FCA will bring. This can be done by upgrading digital systems and ensuring you have watertight processes for things like customer due diligence, suspicious activity reporting and company-wide risk assessments.
These AML reforms could represent the biggest change to compliance in a generation - they will alter how AML is carried out by every accounting business in the UK - but preparation is key to try and reduce the time and cost challenges that lie ahead.
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