In late November, Amy Bell hosted a free Ask Me Anything session on one of the hottest topics in the profession, the government’s plan to move AML supervision of law firms to the Financial Conduct Authority (FCA).
The session was unsurprisingly jam-packed, and as always, Amy brought clarity, context and a very practical lens to what this might mean for firms.
This blog is a short debrief of the key points Amy covered in the session. If you couldn’t attend live, the recording was shared with all registrants, and the core insights are captured below.
Contents
- The government’s “nailed on” plan to move AML supervision
- Why the legal sector’s compliance performance matters
- The four supervision models considered
- Key proposals in the current consultation
- The very real challenges for law firms
- FCA versus SRA, what differs in approach
- What this could mean for compliance programmes
- FAQs from the AMA session
- How Teal can support you
1. The government’s “nailed on” plan
Amy opened the session with a clear message, the shift of AML supervision from the legal regulators to the FCA is happening.
As she put it, the government had “announced this plan” and it looked “nailed on” as far as direction of travel was concerned, with little likelihood of political reversal.
There is no timetable yet, although dates such as 2029 have circulated in commentary. Amy explained that this wasn’t based on anything formal, more a reflection of the election cycle and the presumption that the change would happen before the next parliamentary term concluded.
2. Why the legal sector’s compliance performance matters
Amy reflected on the well publicised 70 percent non-compliance figure in the sector.
She explained that this number is frequently quoted, but when Teal completes audits it is extremely rare not to find something that needs updating or aligning with recent changes in the law.
In other words, even well run firms have room for improvement, and persistent sector wide issues inevitably influence government thinking about supervision models.
Amy’s view was simple, if the government perceives a long term pattern of underperformance, it is unsurprising they are looking seriously at alternatives.
Please remember our AML Audits are one of the best ROI you will ever spend on your compliance!
3. The four supervision models considered
Amy walked through the four formal options that were on the table during consultation:
- Give OPBAS more power
- Consolidate the existing professional body supervisors
- Move supervision of the legal sector to the FCA
- Create one single supervisor for the whole UK system
She highlighted that option two would have shifted significant responsibility to the SRA, while option three would take the legal sector into the FCA’s remit. Option four, a single supervisor, would resemble AUSTRAC’s model in Australia.
(Teal Compliance has it’s sister company, AML Sorted, already working with Australian Law Firms ahead of their new Tranche 2 in July 2026.)
The consultation responses showed a striking divergence. The legal and accountancy respondents leaned toward consolidation or OPBAS reform, while banks showed strong support for the FCA-leading model.
4. Key proposals in the current consultation
Amy then covered the proposals currently being explored, including:
- A public register of all in-scope firms
- Gatekeeping checks before firms are permitted to operate
- Powers to suspend firms from regulated activity
- Greater information sharing between the NCA and FCA
- Sector wide risk profiling
- Onsite and desk-based inspections
- Perimeter policing to identify unregulated activity
She also raised the risk of double jeopardy, where both the FCA and SRA might take action on the same issue if the systems are not tightly coordinated.
Please do take a look at our COMPLIANCE BLOGS & INSIGHTS to keep you up-to-date HERE.
5. The very real challenges for law firms
One of Amy’s strongest themes for the session was proportionality.
The FCA is used to supervising major financial institutions with dedicated, well resourced compliance teams.
By contrast, most law firms balance AML obligations with tight budgets, small teams and limited technology. As Amy noted, “I can’t tell you that I know any law firm that has got unlimited money to throw at their AML programme” .
She also questioned how the FCA’s established processes, which rely heavily on scale, automation and high volume monitoring, would translate into a sector where the risks differ fundamentally.
6. FCA versus SRA, what differs in approach
Amy gave a helpful overview of how FCA supervision culture differs from that of the SRA.
The FCA environment is “much more mature”, with a long history of outcome focused regulation, followed by a period of intense enforcement when firms failed to deliver the required standards. This enforcement-first culture has shaped a compliance mindset in financial services that is very different from that of law firms.
Amy went onto share insights on how the FCA’s reliance on data, numbers and complex transaction monitoring stands in stark contrast to the legal sector’s relationship-based, advisory model, and how these philosophical differences could affect supervision expectations.
7. What this could mean for compliance programmes
Using her well-known “compliance machine” analogy, Amy explained the crucial role of consistency within a firm’s controls.
She emphasised the importance of checking how systems work in practice, addressing persistent non-compliance, and focusing on the individuals or processes that repeatedly create risk.
These points landed strongly with our attendees, especially those responsible for internal audits or MLRO oversight.
Amy also flagged that traditional file reviews (when only sampling a tiny proportion of overall caseloads) rarely provide meaningful assurance. Some foreign regulators, by contrast, expect sampling of ten percent of caseloads when risk indicators arise, far higher than many UK firms currently achieve.
8. FAQs from the Ask Me Anything FCA Supervision session
Although not all questions that Amy was asked are here, but there was clearly several themes that emerged during the Q and A at the end of the session!
Will firms face double jeopardy with the SRA and FCA?
Amy explained this is a genuine concern. If the FCA investigates and shares findings with the SRA, firms could face scrutiny twice unless legislative safeguards resolve this risk early in the design of the regime.
Could law firms be compelled to provide privileged information?
Amy cautioned that this area needs clarity. The consultation includes provisions about compelling information, but privilege must be protected and the sector needs reassurance that privilege will not be overridden in supervision processes.
How will small firms cope with increased expectations?
Amy noted that small firms already struggle to resource AML and cannot mirror the compliance structures seen in financial services. This must be addressed if FCA supervision is to be workable in practice.
Is the move to FCA supervision a bad outcome?
Amy didn’t position it as good or bad, more inevitable. Her emphasis was on preparedness, proportionality and the importance of constructive feedback during consultation.
9. How Teal can support you through the transition
With so much uncertainty, firms are already asking what they should do now. Amy’s advice was simple: strengthen your compliance machine, focus on consistency, and ensure decision makers in your firm understand the direction of travel.
Our Ask Teal service gives compliance officers rapid access to expert guidance on the exact issues raised in the AMA session, from supervision changes to drafting robust controls.
And if you want to benchmark your current AML programme before the landscape shifts:
Book an AML Audit HERE
