The UK’s anti-money laundering (AML) regime is entering a new chapter. The government has announced that the Financial Conduct Authority (FCA) will become the sole statutory supervisor for AML and counter-terrorist financing (CTF) across legal, accountancy and trust and company service providers.
This marks a significant shift away from the fragmented model of multiple supervisory bodies (including HMRC, the Gambling Commission, and numerous professional body supervisors/PBSs) to a unified supervisory approach. But what does this mean for ID verification and compliance?
Why the change?
The government’s decision follows concerns that the current supervisory landscape is fragmented and inconsistent, with some PBSs lacking the resources or authority to enforce standards effectively. According to the UK’s National Crime Agency, an estimated £12 billion in criminal cash is generated annually in the UK, which is an alarming figure that has driven calls for reform.
There’s also growing international pressure, particularly from bodies like the Financial Action Task Force (FATF), to strengthen AML controls and ensure consistent, enforceable oversight. By consolidating supervision under the FCA, the UK aims to build a more rigorous and coherent AML regime, eliminate regulatory arbitrage and increase accountability.
Key implications for regulated sectors
Firms in sectors such as law and accountancy (many of whom previously reported to PBSs like the Solicitors Regulation Authority or the Law Society of Scotland) will now fall under the direct scrutiny of the FCA. This represents a major cultural and operational shift, particularly for firms unfamiliar with the FCA’s more data-driven, tech-aware and proactive approach to enforcement.
Although the FCA hasn’t yet issued its detailed roadmap, its existing strategy on reducing financial crime suggests several areas that are likely to come under the microscope:
- Identity verification
- Cybersecurity and fraud prevention
- Use of digital platforms to support AML compliance
- Evidence-based reporting and risk management
The possible role of ID verification with the new AML changes
In its 2024 financial crime strategy, the FCA stressed the growing sophistication of cyber fraud and the evolving risks introduced by widespread use of AI. It stated:
“Technology is transforming fraud and money-laundering detection, but cyber fraud, cyber-attacks and identity fraud are increasing in scale, sophistication and impact.”
This directly points to the need for robust identity verification tools as a frontline defence against financial crime. Firms should expect enhanced scrutiny over how they verify customer identities, store/audit digital interactions and monitor for ongoing suspicious behaviour.
In July 2025, the UK government also issued a public statement underlining the importance of digital identities in modernising AML controls. The FCA’s new supervisory position aligns with that view, suggesting that digital onboarding tools are no longer a ‘nice to have’ but could very well be a regulatory expectation.
What should firms be doing now?
While details of the FCA’s specific plans are still pending, there are practical steps that regulated businesses (particularly those newly under FCA AML oversight) can begin taking now.
- Audit your existing AML framework: Understand how your current processes stack up against FCA expectations, especially in areas such as KYC, monitoring and risk assessment.
- Reassess your identity verification protocols: Are your ID checks still reliant on manual processes or siloed solutions? Regulators may increasingly expect a more robust, digitally traceable method of verification.
- Consider your ability to demonstrate compliance: In a world of escalating accountability, your systems need to offer not just functionality, but clear audit trails of customer due diligence, document execution, and internal oversight.
- Monitor developments: As the FCA formalises its role, it’s important to stay alert for consultations, updated guidance, and potential changes to reporting requirements.
Looking ahead to a shift in accountability and cohesion
This move represents a major philosophical shift. A single regulator reduces ambiguity but also raises the bar, as expectations will become more consistent and more demanding.
Whether you’re in law, accountancy, or another regulated sector, this is a signal that regulatory cohesion is arriving and with it greater scrutiny. The days of fragmented guidance are numbered, and firms should anticipate a more data-driven, outcomes-based approach to AML compliance.
In this environment, those with strong digital foundations (secure ID verification, integrated monitoring, and transparent workflows) will be best placed to adapt quickly as expectations evolve.
To find out more about how you can stay ahead in the world of ID verification and e-signing, download our guide below.
