The move from SRA to the FCA:
3 reasons to be proactive, 3 ways to be prepared

The UK government has confirmed that the Financial Conduct Authority (FCA) will become the single Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) supervisor for the legal sector – replacing the Solicitors Regulation Authority (SRA) and other professional body supervisors.

This reform aims to simplify and strengthen AML supervision by addressing long-standing inconsistencies between different supervisors across UK industries.

While headlines focus on the handover, what’s really changing is how compliance will be evidenced. The FCA’s involvement is not about rewriting the rules, it’s about ensuring firms can demonstrate that their AML controls are working in practice. For most firms, this is less about reinvention and more about becoming evidence-ready

Three reasons to be proactive

1. The regulator is changing – but the regulations are not.

The Money Laundering Regulations (MLRs) remain unchanged. The government’s consultation response clearly states:

“Firms that are already compliant should not need to make changes to their AML/CTF controls.”

That’s good news. Firms that have invested in strong, risk-based compliance frameworks are already in a solid position.

Now’s the time to optimise existing practices and systems, not overhaul them.
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2. You have time to prepare – there’s a window to get ahead.

This reform won’t happen overnight. The consultation on supervisory powers is scheduled for November 2025, with the FCA transition plan expected in 2026. But it will likely take several months, if not multiple years, to come into full effect.

That gives firms a valuable window to strengthen controls – from documentation and client risk scoring to training and audit readiness. Those already following  AML best practice will find themselves with strong foundations to adapt to FCA’s supervision when it arrives.
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3.  Consistency under one supervisor.

Under the current system, AML supervision is spread across 22 different bodies. This fragmentation has often created overlapping rules and confusion about accountability.

A single supervisor means:

• Consistency across sectors
  
  
• Clearer responsibilities for firms
  
  
• More efficient oversight and reporting

This alignment could simplify compliance and strengthen confidence, particularly for law firms working with clients in the financial sector. 

Three ways to prepare 

1. Get data-driven and evidence ready.

The FCA’s supervision model is built on granular, evidence-based oversight. It’s not enough to be compliant – you’ll need to prove it with clear, accessible data.

Now’s the time to:

• Modernise record-keeping and automate AML workflows with built in audit trails
  
  
• Improve data quality and reporting
  
  
• Showing how your controls work in practice
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2. Get your risk assessments right.

Risk assessments have emerged as the central foundation of AML compliance under recent AML regulations – and they will likely be front-and-centre of FCA supervision.

Now’s the time to ensure your Risk Assessment policies and practices are:

• Data-driven and connected to client due diligence
  
  
• Evidence-based
  
  
• Regularly reassessed, updated, and continuously monitored

Up-to-date, data-backed risk assessments are your strongest defence under scrutiny.

3. Prepare for proportionate (but focused) supervision.

The FCA’s powers will be applied proportionately based on risk, meaning higher-risk firms and practice areas – such as property, trusts, and international work – will see greater scrutiny.

Larger or higher-risk firms should now:

• Review governance structures and accountability
  
  
• Strengthen senior-management oversight
  
  
• Invest in tooling and compliance support early

Firms that embed compliance into their culture and decision-making will adapt most easily to FCA supervision.

For guidance on how to build a genuine compliance culture, check out this article: 3 practical tips for creating a compliance culture
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Timeline at a glance

‍Nov 2025 - Supervisory powers consultation - Government consultation to refine FCA’s AML powers.

2026 (TBC) - FCA transition plan published - Details of phased handover from SRA/other regulators.

Post-2026 - Implementation period - Gradual transfer of AML supervision to the FCA.

(Timeline subject to legislative process and consultation outcomes.)
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What this means for law firms

This isn’t a revolution in what law firms must do – it’s simply a different route in the same direction of travel: transparent, robust, data-driven compliance. 

Firms that commit now to strong data management, a transparent process and clear governance will be ready for the transition and better placed to manage risk and build trust. 

In summary

• Core AML regulations remain unchanged
  
  
• Use the transition period to refine and document controls
  
  
• Be prepared to move towards a more data-driven, evidence-based AML approach
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Legl helps firms across the UK strengthen AML oversight – with automated risk assessment, continuous monitoring and audit-ready reporting that support FCA-level expectations. Get in touch to find out how we can help you use this window to get ahead.