FCA handed anti-money laundering power in shake up
Along with the FCA and HMRC, the Solicitors Regulation Authority (SRA) served as a Professional Body Supervisor (PBS) for anti-money laundering and counter terrorism financing for most law firms in England and Wales. These bodies were responsible for supervising firms that carry out activities within the scope of the money laundering regulations.
Published: 03:10 PM,Oct 29,2025 | EDITED : 07:10 PM,Oct 29,2025
The UK government’s reform of anti-money laundering and counter-terrorism financing supervision will significantly change and diminish the roles of the legal regulator and HMRC. The treasury revealed the outcome of its consultation on reforming anti-money laundering and counter-terrorism financing supervision, primarily for professional services, by creating a Single Professional Services Supervisor (SPSS), with the Financial Conduct Authority (FCA) taking on this new role.
Along with the FCA and HMRC, the Solicitors Regulation Authority (SRA) served as a Professional Body Supervisor (PBS) for anti-money laundering and counter terrorism financing for most law firms in England and Wales. These bodies were responsible for supervising firms that carry out activities within the scope of the money laundering regulations.
However, under the reform, the FCA will supervise legal services, accountancy services and trust and company service providers, including all firms currently supervised by the PBS and HMRC. The government believes that having the City watchdog (FCA) oversee professional services firms is the most effective approach. The FCA was chosen for its existing expertise, as it already supervises financial institutions on anti-money laundering and counter terrorism financing.
In the foreword, City minister Lucy Rigby MP explained, “This change will align the supervision of professional services firms with other similar parts of the economy which already have a public sector supervisor”.
The implementation is subject to the passage of enabling legislation, with the Treasury to publish a separate consultation on the new supervisor’s powers.
Ali Ishaq, partner at law firm Reed Smith, stated, “Designating the FCA as SPSS could strengthen AMI, enforcement by providing centralised, data-driven oversight, stronger investigative tools, better intelligence-sharing and more credible deterrence.
However, Colette Best, director of anti-money laundering at law firm Kingsley Napley, stated: “The FCA is not a natural supervisor for legal services and there are a lot of questions to be answered”.
The Law Society notes solicitors will face significant change following this move, as the role of the SRA “will be significantly reduced”.
On another issue — with the Chancellor’s Budget coming up next month, the matter of tax is causing some concern, particularly among the high earners.
The top one per cent of taxpayers account for around a third of all income tax and capital gains tax paid in the financial year end of 2024, it has been revealed. According to HMRC, the top 500,000 taxpayers contributed £93.8 billion last year, which represented 33 per cent of the total raised.
The top 100,000 paid £54.9 billion and covered a fifth of total receipts, according to a Freedom of Information request obtained by the investment service Wealth Club. The balance in tax paid between the super rich and Brits across the country uncovers the Treasury’s reliance on a small portion of the population to pay for expenses.
The Chancellor Rachel Reeves has indicated that she will target the wealthy in next month’s Budget, arguing that those with the “broadest shoulders” should pay their “fair share”, of taxes. A Treasury spokesman said in a statement: “The UK’s tax system is progressive, meaning those with higher incomes contribute more, helping to support vital public services”.
Income tax is the largest revenue-raiser for the UK government while capital gains tax receipts are more volatile on a monthly basis. In the most recent set of data published by the Office for National Statistics (ONS), it was shown that HMRC collected £32 billion more last month than at the same time last year.
Income tax and national insurance contributions totalled £235.3 billion on the month, with Quilter’s tax expert Rachel Griffin pointing out that the figure was “artificially inflated by the freeze to tax thresholds, which has steadily dragged more earners into higher tax bands as wages rise”.
“This doesn’t point to a roaring economy but a sign of a Treasury increasingly reliant on extracting more from the same taxpayers”, Griffin said.