The UK’s Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) landscape in 2025 is undergoing one of its most significant shifts in over a decade. Following years of fragmented supervision, uneven enforcement, and increasing pressure from international bodies such as the Financial Action Task Force (FATF), the UK has moved decisively toward a more integrated, technology-enabled, and outcomes-focused regulatory model. Throughout 2025, policymakers have prioritised reforms that strengthen supervisory coherence, enhance intelligence-sharing, and modernise the regulatory perimeter to reflect the rapid evolution of financial services.
The year has seen growing momentum behind a risk-based, data-driven AML regime, with an emphasis on supervisory consolidation under the Financial Conduct Authority (FCA), greater accountability for senior management, and improved detection capabilities leveraging advanced analytics. Alongside these structural changes, enforcement activity remains robust, with regulators signalling a clear expectation that firms move beyond basic compliance and demonstrate genuine effectiveness in mitigating financial crime risk.
Key Regulatory Milestones and Reforms in 2025
Several key developments shaped the UK’s AML landscape in 2025:
- National Risk Assessment (NRA): The latest NRA, published in July 2025, identified emerging threats like AI-driven fraud, cryptoasset use, and the role of professional enablers.1
- Draft Regulations: HM Treasury released a consultation response and draft regulations in September, with final implementation anticipated in early 2026.2
- Failure to Prevent Fraud: A provision from the Economic Crime and Corporate Transparency Act (ECCTA) making “failure to prevent fraud” a corporate criminal offence came into effect in September 2025, encouraging stronger compliance measures in larger organisations.3
- Centralised Supervision: A significant reform announced in October 2025 designated the FCA as the single professional services supervisor (SPSS), reducing the supervisory role of professional bodies.
The UK AML/CFT Supervisory Reforms and the FCA’s New Era
The UK’s AML/CFT system has entered a pivotal phase of reform, representing the biggest shift the sector has seen in a generation. In October 2025, HM Treasury confirmed that the Financial Conduct Authority (FCA) will become the single professional services supervisor (SPSS) for AML/CFT, consolidating oversight previously split across 22 professional body supervisors (PBSs) and parts of HMRC.4
For UK compliance professionals in legal, accountancy, and trust or company service providers (TCSPs), this is not incremental change, it is transformational. With an estimated £100 billion laundered through the UK each year5 and 65% of firms reporting increased AML/CTF expenditure over the past two years6, the FCA’s new mandate represents a decisive escalation in regulatory intensity.
What Has Actually Changed?
- The FCA will supervise all in-scope professional services firms currently overseen by bodies such as the Solicitors Regulation Authority (SRA), Institute of Chartered Accountants in England and Wales (ICAEW), Association of Chartered Certified Accountants (ACCA), and HMRC (for TCSPs).
- PBSs lose their AML supervisory powers but retain professional conduct regulation.
- A further consultation (open until 24 December 2025) will grant the FCA the full suite of MLR powers: gatekeeping, directions, skilled-person reviews, unlimited fines, and public censure.7
No firm start date has been set, implementation depends on primary legislation, but transition planning is already underway, with data-sharing agreements in place to avoid mass re-registration.
The Pros and Cons: A Balanced View
Benefits
- Consistency: one supervisor ends regulatory arbitrage across different bodies.
- Stronger enforcement: ‘In 2024/25, the FCA secured 5 convictions and charged 19 suspected individuals/entities (of which 12 related to suspected fraud and anti-money laundering offences)’.8
- Robust gatekeeping: universal fit-and-proper tests for owners and managers.
Drawbacks
- Higher costs: ICAEW warns of “confusion and higher compliance costs” from FCA fees and detailed guidance.9
- Resource strain: the FCA must absorb thousands of new supervised entities without a confirmed budget uplift.
- Enforcement shock: firms used to infrequent PBS visits may face FCA’s proactive, data-driven inspections.
What Compliance Teams Must Do Now
The FCA’s supervisory philosophy is markedly more intensive and exacting than most current PBSs.10 It would therefore be prudent for firms expecting FCA oversight to invest more heavily in AML/CFT frameworks and staff training.
But these reforms are not only relevant to the newly affected sectors. As AML/CFT expectations rise and enforcement becomes more assertive, all firms must strengthen their compliance frameworks and operational workflows. Building a robust, well-governed system is now essential for navigating this new era of AML/CFT.
Immediate action checklist:
- Conduct a gap analysis against the FCA Financial Crime Guide (FCG) and Thematic Review findings.
- Strengthen firm-wide risk assessments and client due diligence policies.
- Deliver refreshed Senior Manager accountability training. The FCA expects demonstrable SMF engagement.
- Budget for new FCA supervision fees (cost-recovery model) and potential skilled-person reviews.
- Monitor the December 2025 consultation response and forthcoming Delivery Plan.11
How RegTech Can Bridge the Gap
Technology is ready to absorb much of the new burden:
- Modern KYC/AML platforms cut ongoing CDD (Client Due Diligence) time and false-positive rates.
- Automated transaction monitoring and PEP/adverse-media screening align directly with FCA expectations on real-time risk management.
- Centralised audit trails provide the evidence trail that the FCA demands during inspections.
Early adopters will turn a compliance burden into a competitive advantage, freeing MLROs and compliance officers to focus on high-risk relationships rather than manual processes.
How Leo RegTech Steps In
Leo RegTech is purpose-built to address these challenges. It delivers a single, integrated platform for client onboarding, identity verification, including biometric validation, AML screening (background checks, including PEP, sanctions, enforcements and adverse media) and enhanced due diligence, all within one seamless workflow.
Our AI-driven solution significantly reduces false positives (60%), freeing compliance teams to focus on genuine risk concerns. The platform is fully compliant with UK Money Laundering Regulations and FCA standards and can be configured and tailored to your needs.
What’s more, audit-ready and historical records ensure transparency for audits, senior management, and regulators alike. The platform’s scalability means it can grow with you.
To further enhance, this is how Leo transforms KYC/AML compliance, by simplifying the entire process, going far beyond basic checks and reports.
Some of the solution’s features include:
- User access for potential clients to deliver all relevant information and evidence KYC and ID checks for the compliance team to review. The platform will chase up missing documents too.
- Leo’s CDD reports link to client registers and repositories for relevant documents. It also links to remediation registers if any anomalies are picked up. And this is the point where compliance can decide if it is necessary to carry out enhanced due diligence if this was not yet the case.
- Integrated meeting reports configurable to your needs to evidence regular reviews and discussions.
- Duplication of reports year on year to evidence progress and improvements on a particular client, where necessary.
- Time savings.
- Real-Time Monitoring: Leo’s real-time alerts flag suspicious activities instantly.
Learn more about our Client Due Diligence solution here.
Contact us for more information here.
To conclude…
Taken together, these developments signal a decisive shift in the UK’s approach to financial crime: one that demands greater sophistication, stronger governance, and measurable effectiveness from all regulated firms. As the FCA assumes a more centralised and assertive supervisory role, organisations must adapt quickly, embedding risk-based, technology-enabled controls that can withstand heightened scrutiny. The message from regulators is clear, this new era of AML/CFT oversight leaves little room for complacency, and firms that invest early in resilience will be best positioned to thrive.
Compliance professionals who act decisively today, strengthening policies, upskilling teams, and embracing RegTech, will not merely survive the transition; they will set the new gold standard.
Stay ahead. The FCA is coming.
Book a demo with us today and learn how we can help you stay compliant.
- https://assets.publishing.service.gov.uk/media/6877be59760bf6cedaf5bd4f/National_Risk_Assessment_of_Money_Laundering_and_Terrorist_Financing_2025_FINAL.pdf ↩︎
- https://www.gov.uk/government/publications/proposed-amendments-to-the-money-laundering-regulations-draft-si-and-policy-note/the-draft-money-laundering-and-terrorist-financing-amendment-and-miscellaneous-provision-regulations-2025-policy-note ↩︎
- https://www.gov.uk/government/news/new-measures-to-tackle-fraud-come-into-effect ↩︎
- https://www.gov.uk/government/consultations/reforming-anti-money-laundering-and-counter-terrorism-financing-supervision/outcome/reform-of-the-anti-money-laundering-and-counter-terrorism-financing-supervision-regime-consultation-response ↩︎
- https://www.nationalcrimeagency.gov.uk/news/nca-and-fca-publish-priorities-to-combat-biggest-economic-crime-threats ↩︎
- https://www.pwc.co.uk/financial-services/assets/pdf/emea-aml-survey-2024.html.pdf ↩︎
- https://www.gov.uk/government/consultations/anti-money-laundering-and-counter-terrorist-financing-supervision-reform-duties-powers-and-accountability-consultation/anti-money-launderingcounter-terrorist-financing-amlctf-supervision-reform-duties-powers-and-accountability-consultation ↩︎
- https://www.fca.org.uk/publication/annual-reports/annual-report-2024-25.pdf ↩︎
- https://www.icaew.com/insights/viewpoints-on-the-news/2025/oct-2025/handing-aml-supervision-to-fca-will-increase-costs-for-business ↩︎
- https://www.pinsentmasons.com/out-law/news/challenge-professional-services-fca-anti-money-laundering-oversight ↩︎
- https://www.gov.uk/government/consultations/anti-money-laundering-and-counter-terrorist-financing-supervision-reform-duties-powers-and-accountability-consultation/anti-money-launderingcounter-terrorist-financing-amlctf-supervision-reform-duties-powers-and-accountability-consultation ↩︎
