Professional-body AML supervision is no longer fit for purpose

Opinion: 22 professional bodies supervise lawyers and accountants under the Money Laundering Regulations 2017. The Financial Services and Markets Bill [HL] moves this to the FCA from autumn 2028, and SAMLA 2018 already allows a fine power.

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53 paragraphs

Charles Pycraft · November 2026 · London

Cover card: Professional-body AML supervision is no longer fit for purpose. Navy ground with a grid of 22 small marks, some hollow, observed through a gold magnifying glass, labelled MLR 2017, and a small CP mark. An investigation by Charles Pycraft

This article is part of Offshore: the enabler chain. It sits in pillar 2: Why the watchdogs miss it. Start with the series overview if you are new to the work.

Opinion. Updated on 13 November 2026.

In its 2025 National Strategic Assessment, the National Crime Agency judged it a realistic possibility that more than £100 billion is laundered each year through or within the UK or through UK-registered corporate structures. Its 2026 assessment says professional enablers remained prominent in facilitating the financing of serious and organised crime affecting the UK during 2025. Services that can be misused include company formation, handling client money and acting as a trustee or nominee.

In the sectors covered by the reform, firms and sole practitioners carrying out activities within scope of the Money Laundering Regulations 2017 are currently supervised by professional bodies or HM Revenue & Customs (HMRC). The Office for Professional Body Anti-Money Laundering Supervision (OPBAS), part of the Financial Conduct Authority (FCA), oversees the professional bodies. The government has chosen the FCA to take over direct supervision. The FCA expects the transfer to begin in autumn 2028 and finish around 2030.

Can the current system provide effective supervision during that transition, given the weaknesses OPBAS has identified and the absence of a power under the OPBAS Regulations 2017 to fine a professional body for breaching its supervisory duties?

Twenty-two supervisors, and a watcher of the watchers

HM Treasury counts 22 professional body supervisors in the legal and accountancy sectors. The FCA counts 25 bodies within OPBAS's oversight, including three that have delegated their regulatory functions. OPBAS is funded by fees charged to professional body supervisors.

HM Treasury recorded 33,830 accountancy businesses and 7,564 legal businesses under professional body supervision in 2023-24. In 2024-25 those figures were 34,352 and 7,500 respectively. The ministerial foreword to the October 2025 decision counted 23 supervisors for the professional services covered by the reform, including HMRC, and said that this structure "inevitably leads to inconsistencies in supervision and enforcement".

OPBAS, in its March 2026 report on its 2024/25 work, assessed six professional body supervisors. Three were rated only partially effective on supervision, and three on enforcement. The two groups were not identical.

Assisted compliance and the deterrent effect of fines

OPBAS reported that standards had risen and baseline compliance was good. It also found that some professional body supervisors relied too heavily on helping firms correct breaches. In one accountancy case study, several files showed that members were given repeated opportunities or excessive time to address non-compliance before referral for enforcement.

For 2023-24, OPBAS recorded 201 accountancy fines totalling £380,299, an average of about £1,900, and 39 legal fines totalling £470,859, an average of about £12,100. HM Treasury's 2023-24 report gives a total of £851,200 in its narrative and £875,700 in Table 4.K. Its 2024-25 report, published on 8 December 2025, gives 338 fines totalling more than £2 million in its narrative. The total row of Table 4.K gives 336 fines and displays the value as £2 million.

OPBAS also found that some supervisors had difficulty collecting fines. In my view, that and the delays in escalating breaches make a stronger case for questioning deterrence than a comparison with the NCA's UK-wide estimate.

Professional bodies and enforcement

All six bodies assessed by OPBAS had separated their supervisory functions from their advocacy and disciplinary functions. OPBAS nevertheless found that some supervisors took an overly member-focused approach. In my view, the test is whether a supervisor takes timely and proportionate enforcement action when a firm fails to remedy a material breach.

One concluded case: the Institute of Certified Bookkeepers

On 28 November 2025 the FCA issued a Final Notice publicly censuring the Institute of Certified Bookkeepers (ICB), and announced it on 2 December. It was the FCA's first enforcement outcome against a professional body supervisor.

In its 2024/25 annual supervision report, ICB said it supervised more than 5,000 members working in just over 3,000 UK practices. The FCA found that between 1 January 2022 and 26 July 2023, ICB failed to adopt an adequate risk-based approach and did not effectively monitor its members. The FCA said ICB's decision to suspend both on-site and virtual inspections for nine months caused or aggravated the most serious breaches and increased the risk of money laundering. The Final Notice records that ICB engaged constructively with OPBAS and took steps to address the concerns. ICB publicly accepted the findings and said it had strengthened its supervision and governance. The findings concern ICB's performance as a supervisor.

Under the OPBAS Regulations 2017, the FCA can publicly censure a professional body supervisor or recommend that HM Treasury remove it from the statutory list of supervisors, or both. The FCA concluded that public censure was appropriate in this case. The Regulations give it no power to impose a financial penalty on a professional body supervisor for those supervisory failings.

A reform that is agreed, and a window that remains open

HM Treasury consulted on reform in 2023 and published its decision on 21 October 2025. It chose the FCA as the single supervisor for in-scope professional services after considering options that included giving OPBAS more powers or consolidating the professional body supervisors. The FCA estimates that the change will affect around 60,000 businesses and sole practitioners, including accountancy businesses and trust or company service providers currently supervised by HMRC.

In my view, that is the right direction of travel. The fitness problem is the timetable, and what happens until then.

On a web page first published on 22 September 2026, the FCA said it expected supervision to begin transferring in autumn 2028 and the phased transfer to finish around 2030. The Financial Services and Markets Bill [HL] contains the enabling provisions. The transfer itself is to be implemented through secondary legislation, including changes to the Money Laundering Regulations 2017.

The Bill completed its Lords stages on 15 September 2026 and received its Commons second reading on 10 November. The Public Bill Committee is due to begin on 24 November and is expected to report by 5 pm on 15 December 2026.

The government has said the transfer depends on working systems, trained staff and arrangements for sharing information. What must be ready before the first firms move, and how will the Treasury and the FCA show that existing supervisors are maintaining standards in the meantime?

What should change

  1. Put a statutory backstop in the Bill. Amendments tabled during the Bill's Lords stages proposed a duty on the Treasury to publish and lay a transfer timetable within three months of Royal Assent. MPs could propose a new clause at committee or report stage requiring the Treasury to lay draft transfer regulations in time for parliamentary approval. The regulations should provide for the first firms to move by 31 December 2028 and the remainder by 31 December 2029, with transitional provisions that keep every firm under supervision. The Treasury and FCA should publish how weaknesses in existing supervision, firm-level risk and operational readiness will inform the order of transfer.
  2. Give the FCA, acting through OPBAS, a power to fine professional body supervisors during the transition. In June 2026 the Treasury said it considered OPBAS's existing powers sufficient for the transition. It should reconsider. Section 49 and paragraphs 8 and 13(3) of Schedule 2 to the Sanctions and Anti-Money Laundering Act 2018 allow regulations to give an oversight body a power to impose civil monetary penalties for breaches of specified requirements by supervisors. The Treasury could amend the OPBAS Regulations using that power, with both Houses approving the draft instrument under section 55. The regulations should include a right of appeal using paragraph 16 of Schedule 2.
  3. Publish an interim directory before the first firms transfer. The Treasury's June 2026 response commits to a public FCA register for the firms it will supervise. The Treasury should use regulations under section 49 of the 2018 Act to provide for a directory in 2027 showing firms' existing supervisory status, with data supplied by current supervisors and updated as firms transfer. The requirement to register with the FCA should apply as each group moves. HMRC already publishes a register of businesses it supervises, including trust or company service providers. Regulation 54(5) permits publication of all or part of a register maintained under regulation 54.
  4. Publish a penalty framework for AML breaches by professional services firms, including trust or company service providers. The FCA should publish indicative starting points for firms coming under its supervision and explain how repeat breaches affect the amount. Regulation 76 requires an effective, proportionate and dissuasive penalty, and regulation 81 requires the FCA to take into account all relevant circumstances, including previous breaches where relevant. Regulations 59 and 60 already allow an unpaid Part 9 penalty imposed by the registering authority to be a ground for refusal, suspension or cancellation where those provisions apply. The Treasury should carry that discretionary ground, with notice and appeal rights, into the expanded registration regime.
  5. Allocate Economic Crime Levy funding for the first 18 months after the FCA starts taking on firms, with a published inspection target. The government has committed levy funding for start-up costs and expects supervisory fees to fund the established regime. The Treasury should allocate funding for the first 18 months of direct supervision, subject to statutory spending authority and money provided by Parliament. The FCA should set and report against a target of at least one on-site inspection or equivalent review of case files each year for firms it rates high risk, with more frequent scrutiny where warranted. Where serious or repeated breaches are identified, the FCA should record its reasons for relying on assisted compliance before escalating to formal enforcement.

Verdict

In my view, professional body AML supervision is no longer fit for purpose. OPBAS identified weaknesses in supervision and enforcement, including cases where firms were given too long to remedy breaches. The ICB censure shows how the FCA can respond to a serious breach of supervisory duties, and the Final Notice identifies the missing power to fine a supervisor. With the first transfers expected in autumn 2028 and completion around 2030, Parliament should set a backstop and require public reporting on how standards are maintained during the transition.

This field note draws on published OPBAS, HM Treasury, FCA, NCA and UK Parliament documents and one concluded Final Notice. It makes no allegation against any person or firm, and membership of or supervision by a professional body is not a finding of wrongdoing. It is provided for general information and is not legal or professional advice.

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