AML supervision of law firms is moving to the FCA. HM Treasury published its response in June 2026. The policy is now settled. The Financial Services and Markets Bill 2026-27 carries the enabling clauses. No transfer date exists yet. The Treasury accepts the switch will take several years.
What has the government decided?
The FCA becomes the single professional services supervisor for anti-money laundering and counter-terrorist financing. It takes over from the professional bodies. Those are the SRA and the Law Societies of Scotland and Northern Ireland.
The scope is wider than solicitors. It covers legal and accountancy service providers, and trust and company service providers.
HM Treasury consulted in November 2025 on the duties and powers the FCA would need. The Law Society responded in December. The response landed in June 2026 and confirmed the direction rather than softening it.
One design choice matters for firms. The Treasury plans to widen the FCA’s powers under the Money Laundering Regulations 2017. It is not writing a new set of duties for firms.
Which bill carries the AML supervision transfer?
The Financial Services and Markets Bill 2026-27. First reading in the Lords came on 19 May 2026. The second reading debate followed on 8 June.
Note the naming. The King’s Speech called it the Enhancing Financial Services Bill. The bill before Parliament carries the other title. Search on the formal name when tracking it.
The Law Society briefed peers before the first Lords debate. It set out its concerns in writing. Its central point is duplication: firms sitting under two regulators during the changeover.
What changes for firms?
Three things stand out.
First, a fit and proper test. The FCA already assesses the integrity, competence and compliance history of the firms it supervises. That assessment extends to legal sector beneficial owners, officers and managers. Lawyers have flagged the compliance history part as going beyond what the SRA asks now.
Second, fees. The FCA charges its own fees. It will consult separately on a model for the legal sector. Nobody has published numbers.
Third, dual accountability. The Treasury plans to legislate for data sharing between the FCA and the old supervisors. It will add a lasting duty to cooperate. The aim is to cut overlap, and the risk of two regulators acting on one failure. The mechanics are not settled.
Fit and proper tests will reach legal sector owners, officers and managers for the first time. The FCA will consult separately on a new fee model. Firms face a spell of dual accountability. The FCA takes AML, the SRA keeps the rest. The SRA does not stop supervising anything until the handover happens.
When does it happen?
No date has been set. That is the honest answer. Treat any figure you read as an estimate.
The consultation response does not give a go-live date. HM Treasury has said only that implementation will take several years. Trade press has reported a target of 2029 for the FCA to take full charge. Commentators put Royal Assent around mid-2027, with transition across 2027 and 2028.
None of those are government commitments. The change also needs secondary legislation nobody has drafted yet. July’s change of Prime Minister adds delay risk to the timetable rather than to the policy.
What should compliance officers do now?
Not wait. Duties under the Money Laundering Regulations 2017 do not change on transfer. The work that matters stays the same work.
Test whether the controls actually run. A new supervisor looks first at four things. Client onboarding, file reviews, firm-wide risk assessment and internal reporting. The FCA wants firms to show controls working in practice. A policy that has sat untouched in a manual since the last SRA visit will not survive that.
Map who counts as a beneficial owner, officer or manager. The fit and proper test runs against that list. Building it now costs nothing.
Watch for the FCA fee consultation. It is the first paper to put a number on the cost.
The Legal Brief set out the law-making programme this bill came from in its King’s Speech 2026 round-up. Its client money package covers the SRA’s parallel work on firm oversight. It shows what the regulator plans for the ground it keeps.
The Law Society keeps a running summary on its UK anti-money laundering supervisory regime page. Legal Futures reported the choice of vehicle in Financial Services Bill will be vehicle for AML switch to FCA.