AML Supervision for UK Law Firms is Changing. Are You Ready?
AML supervision for UK law firms is changing. The FCA is replacing the SRA as the AML supervisor for law firms. The rules stay the same. The regulator does not. The FCA operates very differently from the SRA, and the firms best placed are those preparing now, not when registration opens.
£114.7mn
FCA fines for money laundering-related failings in a single 12-month period.
£460k
Average cost of one FCA Section 166 Skilled Person Review.
FCA AML supervision of UK law firms brings a different model: data-driven, risk-stratified, and focused on deterrence.
The SRA supervised with guidance and graduated escalation. The FCA uses VREQs, own-initiative restrictions, and Section 166 reviews. The costs are material.
Only 22% of SRA-supervised firms were fully AML compliant in 2024/25. The FCA will not allow that to continue.
Preparation takes longer than most firms expect. Technology implementation alone takes 12 to 18 months.
Firms that have not started are already behind.
Key Dates
- October 2025: FCA appointed as Single Professional Services Supervisor (SPSS)
- December 2025: HM Treasury consultation closes
- Q1 to Q2 2026: Consultation response and enabling legislation expected
- Late 2026: FCA registration window opens (estimated)
- Q1 to Q2 2027: Go-live (estimated)
- August 2027: FATF mutual evaluation of the UK
- Plan for Q1 2027. That is the conservative assumption.
SRA
|
Collaborative and guidance-led |
|
Focused on improvement |
|
86 MLR penalties in 2024/25, totalling ~£1.5m |
|
Sector expertise: 280 employed solicitors |
|
Tools: letters, compliance plans, graduated escalation |
FCA
Data-driven and deterrence-focused |
Risk-stratified from day one of registration |
7 ML fines in 2024/25, totalling £114.7m |
Risk-profiling from registration data, day one |
Tools: VREQs, own-initiative restrictions, S.166 reviews (avg £460k) |
What The FCA Will Look For
The FCA tests whether your controls work, not just whether they exist. Across every domain it examines, it looks for documentation, demonstrated effectiveness, and board-level ownership.
- Firm-wide risk assessment: Specific to your firm. Updated within 12 months. Linked to your controls.
- Policies and procedures: Operationalised, monitored, and tested. Not just approved and filed.
- Client due diligence: Complete client matter risk assessments for every in-scope matter. 19% were missing under SRA review.
- Ongoing monitoring: Proportionate and documented. Risk-based throughout, not absent.
- Training and competence: Role-specific, assessed, and recorded. Attendance alone is not sufficient.
- Board governance: Quarterly MI to the board. A documented risk appetite. Named individual accountability.
- Data readiness: Can you produce granular AML metrics within 48 hours? Most firms currently cannot.
- Systems and controls: Automated where possible. Auditable at all times.
- SAR reporting: Decision logs for every MLRO conclusion. Quality-assured.
- Third-party risk: Vendor due diligence. Contractual protections. Periodic review.
How Argus Pro Helps
Aegis Compass | AFC™
A structured AML assessment across every domain the FCA will examine. Shows where your controls stand and what to prioritise. Built for the FCA supervisory environment.
Argus Pro Assess
Scenario-based assessment of whether your people apply compliance obligations correctly in practice. Not whether they attended training.
Advisory
Gap analysis, programme design, and senior stakeholder engagement. Our partners bring backgrounds in forensic financial crime and regulatory supervision.
Know Where You Stand
Aegis Compass | AFC shows your AML maturity across every domain the FCA will test. No surprises during a supervisory visit.
Plan The Work
The output prioritises your gaps by severity. It gives you a phased improvement plan you can show to partners, the board, or a regulator.
No Conflict of Interest
We work alongside your existing compliance advisors and audit partners. We do not replace them.
Common Questions
When does the FCA replace the SRA as the AML supervisor
Plan for Q1 to Q2 2027. The FCA registration window is expected to open in late 2026. Primary legislation is required before go-live.
Will the SRA still regulate my firm?
Yes, for professional conduct. AML and CTF supervision transfers to the FCA. Where an AML failure also implicates conduct, both regulators may act.
Do small firms need to register?
Yes. All in-scope firms, regardless of size, must register. Registration includes fit and proper assessments for beneficial owners and senior managers.
Is there a grace period?
No formal grace period. The FCA applies risk-based supervision from day one. Firms with credible remediation plans receive forbearance. Those with material gaps and no plan face early action.