This article is part of the Autumn 2026 edition of Financial regulation quarterly, which covers practical insight on the regulatory developments in the sector.

One of the most significant expansions of Financial Conduct Authority's (FCA's) regulatory reach in years was announced quietly at a conference - and if you work in law or accountancy, you need to pay attention.

Steve Smart, the FCA's Executive Director of Enforcement and Market Oversight, delivered a speech at the 2026 Law Society Economic Crime Conference in September, sending a message that was both reassuring and cautionary.

The headline?

From the back end of 2028, the FCA will assume responsibility for anti-money laundering (AML) supervision of 60,000 entities across the legal and accounting sectors. In his speech, Mr Smart stated that the FCA has the expertise, tools and intelligence-led approach needed to supervise these sectors effectively.

Mr Smart also reiterated a message that's become familiar in regulatory circles in recent years: partnership is key. He called on regulators, firms and law enforcement to work together, stating that it's only through genuine collaboration that the system will become harder for criminals to exploit.

Why is the FCA taking over AML supervision of legal and accounting firms?

Fraud accounted for nearly half of all crime in England and Wales last year, and estimates suggest that over £100bn is laundered through or within the UK each year. Increases in global instability and rapid technological change have made it easier than ever to commit both at scale.

The two are opposite sides of the same coin: fraud makes the money, and laundering disguises it. The system is under pressure, and the response has been to extend the regulatory net - drawing the FCA into sectors it has never overseen before.

'Can a regulator built for banks really understand us?'

It's a fair question, and one the FCA acknowledges directly. Mr Smart noted that the FCA's a multidisciplinary organisation with almost 400 practising lawyers on its staff.

But he went further. The FCA already supervises thousands of firms across a vast range of sectors and sizes, and it won't be taking a one-size-fits-all approach. The focus will be on ensuring a firm's core AML controls are effective for the risks it actually faces - not on overloading firms with requests and paperwork.

Three practical strengths underpin this:

• Scale and proportionality: The aim is to create friction for criminals and let everyone else get on with their business.
• Intelligence-led disruption: The FCA has been building a track record of proactive detection for some time, including identifying weaknesses criminals could exploit, such as over-reliance on parent company controls and complex lending structures.
• Technology: AI and intelligence systems allow the FCA to process over 56 million records every day and flag high-risk firms earlier than before.

What does this mean for lawyers and accountants?

The FCA will take a risk-based, intelligence-led approach. What it asks of a firm, and how much, depends on the risk profile. The focus is on identifying financial crime and those that facilitate it, not on firms that uphold strong standards and proportionate controls.

What could change for many is the supervisory experience. Legal and accountancy firms may face closer scrutiny of their AML systems and controls, governance arrangements and ability to demonstrate effective compliance in practice. 

For the minority who enable financial crime, the message is unambiguous: the FCA will be making targeted and sustained efforts to find them.

What should law firms and accountancy practices do to prepare for FCA AML supervision?

The legal and accounting sectors have long operated under their own supervisory frameworks. What changes from 2028 isn't the obligation to uphold strong AML standards - that remains constant - but the scale, intelligence and resource that will sit behind oversight of those standards.

For firms already doing the right thing, this is an opportunity. A better-resourced, more sophisticated supervisory regime should, over time, make the system harder for criminals to exploit and fairer for those who compete honestly within it. The question is whether firms are ready to engage. Those that are will be well placed when the transition comes.

If you'd like to understand what the FCA's expanded supervisory remit means for your firm, get in touch with our financial regulation team today.