The government has decided that the FCA will take over anti-money-laundering supervision of the legal and accountancy sectors, and the SRA confirmed in July 2026 that the transfer is in progress. There is no transfer date, no enabling legislation yet, and nothing for a firm to do differently tomorrow.
Article · 5 August 2026
Anti-money-laundering supervision of law firms is moving. The government has decided that the Financial Conduct Authority will take over AML and counter-terrorist financing supervision of the legal and accountancy sectors and of trust and company service providers, under the Single Professional Services Supervisor model. The SRA confirmed in SRA Update issue 152, published in July 2026, that the transfer is in progress.
What there is not, is a date. Implementation is subject to enabling legislation, funding arrangements and a transition plan, and no transfer date has been set. That is the honest position and it is worth saying plainly, because it is the difference between a firm making a plan and a firm making a decision it cannot yet make.
Today the SRA remains your AML supervisor and the Money Laundering Regulations continue to apply to your firm exactly as they did last month. A change of supervisor is a change in who inspects, who collects data and who takes enforcement action. It is not, in itself, a change to the underlying obligations, which come from the Regulations rather than from the supervisor.
The practical implication is narrow. Do not restructure a compliance function, change a supplier, or defer a piece of remediation on the basis of a transfer with no date. Firms that were behind on AML before this announcement are still behind, and the supervisor who finds that out in the meantime is still the SRA.
The government has decided the direction. Implementation depends on enabling legislation, funding arrangements and a transition plan, and no transfer date exists. Anyone offering you a firm date for the FCA taking over legal sector AML supervision is telling you something that has not been published.
Two amendments to the Money Laundering Regulations came into force on 18 November 2025, and unlike the supervisory transfer they bind now.
Regulation 28 was amended so that the Register of Overseas Entities cannot be solely relied on to verify beneficial ownership. This aligns its treatment with that of the Companies House register. In practice that means a conveyancing or corporate team that pulls the ROE entry for an overseas buyer or seller and treats the beneficial ownership question as answered has a gap in its file. The ROE remains useful evidence; it is no longer sufficient evidence.
Regulation 30A was amended to bring the Register of Overseas Entities into the discrepancy reporting framework. Where what the firm finds during customer due diligence differs from what the register shows, that difference is now within the reporting regime rather than outside it.
Both changes bite hardest on exactly the work that also produces the largest client account balances: property transactions and corporate deals involving overseas entities. Firms that updated their client due diligence procedures in late 2025 will have this covered. Firms that did not have a gap in their files dated from 18 November 2025 onwards.
The SRA runs an AML and sanctions data collection exercise every year. The most recent one closed on 27 July 2026; the next will fall due in the same part of the year, and the SRA confirms the exercise and its deadline in an SRA Update ahead of each cycle. It is a recurring obligation rather than a one-off, and it asks for figures a firm can only produce quickly if it has been keeping them: numbers and values of relevant matters, work types, and the firm's own risk position.
The useful discipline is to capture that data as the year runs rather than reconstructing it in the weeks before the deadline. A firm that has to reconstruct it is also, usually, a firm that cannot readily demonstrate the proportionality of its risk-based approach if asked. If the last exercise was a scramble, the cheapest fix is to start the schedule for the next one now, while the matters are still fresh in the system.
This is the part that sits with the accounting side of the firm, and it is where an AML problem most often becomes visible. Rule 3.3 of the SRA Accounts Rules states that you must not use a client account to provide banking facilities to clients or third parties, and that payments into, and transfers or withdrawals from, a client account must be in respect of the delivery by you of regulated services.
That rule is doing AML work as much as accounting work. Money arriving on a matter that never completes and then being sent onward, a client asking for funds to be paid to a third party unconnected with the retainer, a payment received from someone who is not the client — these are Accounts Rules breaches and AML red flags at the same time, and the client ledger is where they show up first.
The records that evidence it are the ordinary ones. Rule 8.1 requires accurate, contemporaneous and chronological client ledgers by client name and matter description, split between client and business side, with a list of balances and a cash book. Rule 8.2 requires bank statements at least every five weeks, and Rule 8.3 the three-way reconciliation signed off by the COFA or a manager. Rule 13 requires records to be kept securely for at least six years — which happens to be the period over which anyone investigating a transaction will want to look.
Because half of the evidence lives in the ledgers. Source of funds sits in the client account, the pattern of receipts and payments sits in the cash book, and the three-way reconciliation is what proves the records are complete. A firm whose client account bookkeeping is current can answer an AML question in an afternoon; a firm whose ledgers are three months behind cannot answer it at all.
The mechanics of keeping that side clean are in client account bookkeeping and in our reconciliation guide. The reporting obligations that sit on the compliance officers are covered in the COFA guide, and COFA support explains what we take on. If you would rather see where the firm stands across the Accounts Rules first, the client account health check takes about ten minutes. None of this is legal advice, and the SRA regulates England and Wales only.
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No date has been set. The government has decided that the FCA will take over anti-money laundering and counter-terrorist financing supervision of the legal and accountancy sectors and trust and company service providers under the Single Professional Services Supervisor model, and the SRA confirmed in SRA Update issue 152 in July 2026 that the transfer is in progress. Implementation is expressly subject to enabling legislation, funding arrangements and a transition plan. Until those exist there is no transfer date, and the SRA remains the supervisor for law firms in England and Wales in the meantime.
No. A change of supervisor changes who inspects, who collects data and who enforces. It does not change the underlying obligations, which come from the Money Laundering Regulations rather than from the identity of the supervisor. Restructuring a compliance function, switching providers or deferring remediation on the strength of a transfer with no date is risk taken for no benefit, and the SRA is still the body that will find any gaps in the meantime. The sensible position is to keep the existing programme current and revisit it when legislation and a transition plan are published.
Two amendments came into force on 18 November 2025. Regulation 28 was amended so that the Register of Overseas Entities cannot be solely relied on to verify beneficial ownership, aligning its treatment with the Companies House register, so a firm that treats an ROE entry as answering the beneficial ownership question now has a gap in its file. Regulation 30A was amended to bring the Register of Overseas Entities into the discrepancy reporting framework, so differences between what due diligence reveals and what the register shows fall within the reporting regime. Both bite hardest on property and corporate work involving overseas entities.
Through rule 3.3 of the SRA Accounts Rules, which states that you must not use a client account to provide banking facilities to clients or third parties, and that payments into, and transfers or withdrawals from, a client account must be in respect of the delivery by you of regulated services. Money arriving on a matter that never proceeds and then being sent onward, a request to pay funds to a third party unconnected with the retainer, or a receipt from someone who is not the client are Accounts Rules breaches and money laundering red flags at the same time. The client ledger is usually where the pattern shows up first, which is why current bookkeeping matters.
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