AML Supervision in the UK:
Annex 1 Firms, Professional Services Firms
& HMRC Supervised Firms
Introduction
The UK’s anti-money laundering (AML) landscape is continually evolving, with supervisors increasing their expectations and strengthening oversight across multiple sectors. Under the Money Laundering Regulations (MLRs), a wide range of businesses must register with an AML supervisor and maintain risk-based systems and controls that are proportionate to the nature of their activities.
Recent major updates to the supervisory framework include:
- Professional services firms such as law firms, accountancy firms and trust and company service providers will transition to FCA AML supervision from 2026, replacing the current model of fragmented oversight by professional bodies and HMRC.
- The FCA has continued its assessments of Annex 1 firms following the Dear CEO letter issued in 2024. The regulator is placing increased emphasis on business-wide risk assessments, customer due diligence, ongoing monitoring, governance, training and documented evidence of compliance.
- HMRC is tightening its supervisory approach for the firms it continues to oversee, including bureaux de change, high-value dealers, estate and letting agents, and art market participants. This includes more detailed monitoring, greater scrutiny of AML frameworks and an increase in on-site compliance reviews.
Together, these changes reflect a broader shift towards more consistent, rigorous and evidence-based AML supervision across the UK.
Firms that fall within scope of the MLRs should ensure that their AML frameworks are current, risk-appropriate and capable of meeting rising regulatory expectations.
Firms that are supervised for AML
Annex 1 Firms
Annex 1 firms are businesses that carry out certain financial-type activities listed in Annex 1 of the Money Laundering Regulations. These activities expose firms to financial-crime risk even where they are not authorised under FSMA.
Typical Annex 1 activities include:
- Invoice Finance & Factoring
- Corporate & Trade Finance
- money broking
- safe-custody services
- certain investment-related services
Because of these activities, Annex 1 firms must register with the FCA for AML supervision and meet FCA expectations on governance, CDD, risk assessments and financial-crime controls.
Professional Services Firms (Moving to FCA AML Supervision)
Professional-services firms include businesses that provide services where there is a heightened risk of abuse for money laundering, such as:
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law firms
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accountancy firms
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trust & company service providers (TCSPs)
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bookkeepers and tax advisers
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estate agents and letting agents
-
insolvency practitioners
Currently, many of these firms are supervised by professional-body supervisors (PBSs) or by HMRC, but the UK Government has confirmed that the FCA will become the single AML supervisor for legal, accountancy and TCSP activities.
These firms must comply with the full MLR framework, including senior management governance, risk assessments, CDD, EDD, ongoing monitoring, SARs, training, and (increasingly) independent AML audits.
HMRC-Supervised Firms
Certain types of businesses must register with HMRC for AML supervision because their activities present elevated money-laundering and terrorist-financing risks. These firms must comply with the full requirements of the Money Laundering Regulations, including customer due diligence, risk assessments, monitoring, staff training and SAR reporting.
AuthoriPay supports the following HMRC-supervised sectors:
- Bureaux de change
- High-value dealers (businesses that trade in goods and accept cash payments of €10,000 or more (including linked transactions; for example, jewellers, precious-metals traders, luxury watch retailers and auction houses).
- Estate Agents & Letting Agents
- Art market participants
What AML Supervisors Require
All firms supervised for AML — whether by the FCA or HMRC — must meet a set of strictly enforced standards. Supervisors are now taking a far tougher approach, and firms are expected to demonstrate robust AML controls at all times.
Below are the four core areas every supervised firm must address.
Governance & Senior Management Oversight
Supervisors expect clear, active accountability for AML at senior level. Firms must evidence strong governance, documented oversight, decision-making records and appropriate escalation routes. Weak senior management engagement is one of the most frequently cited failings across FCA and HMRC reviews.
Business-Wide Risk Assessment (BWRA)
Every supervised firm must maintain a tailored, up-to-date BWRA covering customers, products, services, delivery channels and geographic risks. Boilerplate or generic assessments are no longer acceptable. Supervisors will challenge firms that cannot justify their findings with real evidence.
CDD, EDD & Ongoing Monitoring
Firms must have effective controls for:
• Customer due diligence
• Enhanced due diligence for higher-risk customers
• Ongoing monitoring and transaction review
• Clear triggers for escalation and review
Supervisors now test not just whether policies exist, but whether they are applied consistently and appropriately in practice.
Record-Keeping, Training & Culture
All AML supervisors require firms to keep complete, accurate records that demonstrate compliance with the MLRs. Staff must receive regular, role-specific AML training, and supervisors will assess whether a genuine culture of financial crime prevention exists—not simply a “tick-box” approach.
Our Services
AuthoriPay provides comprehensive AML support for firms across the UK supervisory landscape. Our services are designed to help businesses understand their obligations, strengthen their financial-crime controls and prepare for regulatory scrutiny.
Our support includes:
- • AML gap analysis: A detailed review of your AML framework, risk assessment, policies, onboarding processes, monitoring, governance and evidential documentation. This identifies weaknesses and provides a clear roadmap for remediation.
- • Remediation and control enhancement: We work with firms to address any findings arising from the gap analysis, including revising policies, strengthening risk assessments, improving CDD processes, enhancing monitoring frameworks and supporting governance improvements.
- • Application support: For firms registering with the FCA or HMRC, and for professional services firms preparing an application ahead of the 2026 transition, we prepare the full AML application package including documentation, risk assessments, operational frameworks and supporting evidence.
- • Ongoing AML advisory: We provide continuing support to help firms manage financial-crime queries, review high-risk customers, prepare SARs, produce management information and respond to supervisory questions.
- • Independent AML audits: Where required under the MLRs or requested by supervisors, we conduct independent AML audits to assess control effectiveness and provide practical recommendations.
For firms currently supervised by a professional body, such as accountants, lawyers or trust and company service providers, we strongly recommend conducting an AML gap analysis and completing any necessary remediation before preparing an FCA application. This ensures the firm transitions with a strong and well-documented compliance framework that aligns with FCA expectations.
Whether you are an Annex 1 firm responding to FCA assessments, an HMRC-supervised business facing increased monitoring, a professional practice preparing for the move to FCA supervision, or a new firm seeking AML supervision for the first time, we can help you build a robust and fully compliant AML framework.
Get in touch
AuthoriPay Ltd, Milton Hall, Ely Road, Cambridge, CB24 6WZ.