AML Overhaul 2026: Navigating the New Money Laundering Regulations & FCA Supervision Shift

The UK's AML Overhaul 2026: Preparing for Significant Regulatory Changes

The UK's anti-money laundering (AML) and counter-terrorist financing (CTF) regime is on the cusp of a significant transformation. Accountants and bookkeepers in the UK must prepare for what is being termed the AML Overhaul 2026. This includes the impending Money Laundering and Terrorist Financing (Amendment) Regulations 2026, which are set to introduce targeted yet impactful changes to existing rules. Crucially, professional services firms will also experience a monumental shift in AML supervisory authority, moving from various professional bodies and HMRC to the Financial Conduct Authority (FCA).

These reforms aim to strengthen the UK's defences against economic crime, enhance transparency, and ensure a more consistent and robust supervisory approach. Understanding these changes now is vital for maintaining compliance and mitigating risks within your practice.

Understanding the Money Laundering Regulations 2026 Amendments

The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 are currently in draft form, having been laid before Parliament. They are anticipated to be signed into law, with most provisions coming into force in late June or early July 2026. These amendments build upon previous government consultations and aim to refine the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) to address identified weaknesses and maintain alignment with international standards set by the Financial Action Task Force (FATF).

Key Changes Introduced by the 2026 Amendments:

Enhanced Due Diligence (EDD) Refinements: The scope of EDD will be narrowed. It will primarily apply to high-risk countries on the FATF black-list. Furthermore, EDD will be specifically refined for transactions deemed 'unusually large or unusually complex', ensuring a more proportionate and risk-focused approach.
Conversion of Thresholds: All monetary thresholds currently denominated in Euros will be converted to their Sterling equivalents (e.g., €10,000 will become £10,000).
Trust or Company Service Providers (TCSPs): The regulations will expand the scope for TCSPs to include the sale of off-the-shelf companies, bringing these activities more firmly within the AML regime.
Pooled Client Accounts (PCAs): Clarifications are being introduced, allowing banks to continue applying a simplified, risk-based approach to PCAs under specific conditions. These conditions include where the PCA holder is subject to the MLRs (or equivalent overseas regimes), the business relationship presents a low risk, and underlying customer information is available upon request.
Insolvent Bank Customers: Credit institutions may, under certain safeguards, permit insolvent bank customers to open and transact from accounts prior to completing full Customer Due Diligence (CDD) measures, beyond basic identification.

Action Item: Firms should review their current EDD policies and procedures to ensure they align with the refined criteria, focusing resources on genuinely high-risk scenarios and transactions. Update internal systems to reflect the new Sterling thresholds.

The Economic Crime and Corporate Transparency Act 2023: Broader AML Impact

While the Money Laundering Regulations 2026 focus on specific amendments, the broader AML overhaul is significantly influenced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). This landmark legislation, which received Royal Assent in October 2023 and has seen provisions come into effect since March 2024, aims to combat economic crime by enhancing transparency and corporate accountability.

Key AML-Related Provisions of the ECCTA:

Companies House Reforms: The Act grants Companies House enhanced powers. This includes the ability to query or reject filings, remove false or inconsistent information, and mandate identity verification for directors and Persons with Significant Control (PSCs). These measures significantly improve the integrity and reliability of company data, which is crucial for effective CDD.
Failure to Prevent Fraud Offence: A new strict liability criminal offence is introduced, holding large organisations liable if they fail to prevent fraud committed by an 'associated person'. This raises the stakes for corporate governance and internal controls.
Enhanced Information Sharing: The ECCTA facilitates quicker and easier sharing of customer information related to economic crime concerns between firms in the AML-regulated sector. This can occur without prior involvement from the National Crime Agency (NCA) under specified conditions, fostering better collaboration in crime prevention.
Cryptoasset Enforcement: The Act improves criminal confiscation powers for cryptoassets and brings them within the scope of civil forfeiture, demonstrating a tightening grip on illicit funds held in digital forms.
Limited Partnerships: The Registrar's powers over limited partnerships are expanded, introducing mandatory identity verification for general partners and enhancing data sharing.

Key Takeaway: The ECCTA complements the MLR amendments by creating a more transparent corporate environment and empowering authorities with stronger tools, directly impacting how firms conduct due diligence and manage risk.

Bringing Cryptoassets into the AML Net: What Firms Need to Know

The rise of cryptoassets has presented new challenges for AML compliance. The Money Laundering Regulations 2026 explicitly address this by revising due diligence requirements for cryptoasset businesses. A key aspect is the introduction of a nine-month implementation period before cryptoasset businesses are required to carry out counterparty due diligence when entering correspondent relationships.

This phased approach acknowledges the complexities of regulating a rapidly evolving sector, giving firms time to adapt their systems and processes. However, it also signals a clear intention to integrate cryptoasset activities more fully into the established AML framework.

Action Item: Firms engaging with clients involved in cryptoassets must monitor these specific requirements closely. Develop robust risk assessments for crypto-related transactions and ensure staff are trained on the unique risks and due diligence procedures for this asset class. Digital solutions for crypto transaction monitoring will become increasingly valuable.

Bolstering Transparency: Updates to the UK Trust Registration Service (TRS)

Transparency of beneficial ownership remains a cornerstone of the UK's AML strategy. The Money Laundering Regulations 2026 include amendments to the Trust Registration Service (TRS) and its de minimis rules. These changes are designed to further refine who needs to register and what information must be provided, reducing loopholes that could be exploited for illicit purposes.

The ECCTA 2023 also contributes to this by enhancing the powers of Companies House, which indirectly supports the integrity of the TRS by improving the quality of underlying corporate data. Accurate and up-to-date TRS information is vital for accountants dealing with trusts, as it forms a critical part of their client due diligence process.

Action Item: Regularly review client trusts against the updated TRS requirements. Ensure all registrable trusts are correctly registered and that beneficial ownership information is current and verified. This directly supports your firm's AML compliance obligations.

The FCA's New Remit: Supervising Professional Services for AML

Perhaps the most profound change for professional services firms, including accountants and bookkeepers, is the shift in AML/CTF supervisory authority to the Financial Conduct Authority (FCA). Announced by HM Treasury in October 2025, the FCA will assume sole responsibility for supervising legal, accountancy, and trust and company service providers, replacing the current fragmented system involving multiple Professional Body Supervisors (PBSs) and aspects of HMRC's role.

The FCA is expected to assume live supervisory responsibility in 2026, with the new regime needing to be operational before the UK's next FATF mutual evaluation in 2027. This move aims to simplify oversight, strengthen enforcement, and improve consistency across the sector.

What the FCA Supervision Shift Means for Your Practice:

Unified Approach: Instead of navigating different supervisory expectations from various professional bodies (e.g., ICAEW, ACCA, AAT), firms will face a single, consistent AML supervisor.
Increased Scrutiny and Enforcement: The FCA is known for its data-intensive, outcomes-focused, and robust enforcement approach. Firms should anticipate a greater emphasis on senior management responsibility and demonstrable effectiveness of controls, not just well-documented policies. Monetary penalties under the FCA's regime could be materially higher than those previously imposed by PBSs.
No Change to MLR Obligations: While the supervisor changes, your fundamental obligations under the Money Laundering Regulations 2017 (as amended by the 2026 Regulations) remain the same. However, the *interpretation* and *enforcement* of these obligations will likely feel different.
New Reporting Frameworks: Firms may need to adapt to new reporting formats and supervisory engagement models. Detailed implementation parameters, including transitional arrangements, are expected to be published in 2026.

Key Takeaway: This is not merely a change of name on a letterhead; it's a shift towards a more rigorous, financial-services-style of AML supervision. Firms must prepare for a significant uplift in supervisory expectations.

Preparing for the Future: Actionable Steps for Your Practice

The AML Overhaul 2026 presents both challenges and opportunities. Proactive preparation is key to ensuring a smooth transition and robust compliance framework.

1. Review and Update Your Firm-Wide Risk Assessment:

Re-evaluate your client base, services offered, and geographic risk exposure in light of the refined EDD requirements and the broader ECCTA implications.
Ensure your risk assessment explicitly considers cryptoasset risks if applicable to your client portfolio.
Document how your firm identifies, assesses, and mitigates money laundering and terrorist financing risks.

2. Enhance Customer Due Diligence (CDD) Processes:

Scrutinise your EDD triggers and procedures to align with the 'unusually large or unusually complex' and FATF black-list country criteria.
Strengthen beneficial ownership verification processes, leveraging the improved data from Companies House under ECCTA.
Consider how digital identity verification tools can streamline and strengthen your CDD, particularly with the new identity verification requirements for directors and PSCs.

3. Strengthen Internal Controls and Governance:

Ensure your internal policies and procedures reflect the upcoming MLR amendments and the increased expectations of FCA supervision.
Clarify senior management responsibilities for AML compliance and ensure robust oversight and escalation pathways are in place.
Review your firm's registered office obligations and other corporate transparency requirements to ensure full alignment with ECCTA.

4. Invest in Comprehensive Staff Training:

Provide updated training to all relevant staff on the new MLR amendments, the implications of ECCTA, and the FCA's supervisory approach.
Emphasise the importance of a risk-based approach and the need for demonstrable effectiveness of controls, moving beyond a 'tick-box' mentality.

5. Leverage Technology for Compliance:

Digital AML compliance platforms can help automate CDD, sanction screening, and ongoing monitoring, making it easier to adapt to new regulations and meet FCA expectations for data-driven compliance.
Utilise software that integrates with Companies House data and other public registers to ensure accurate and up-to-date client information.
Explore tools that support robust record-keeping and audit trails, critical for demonstrating compliance during FCA inspections.

Conclusion: A New Era for UK AML Compliance

The AML Overhaul 2026, driven by the Money Laundering and Terrorist Financing (Amendment) Regulations 2026 and the shift to FCA supervision, marks a pivotal moment for UK professional services firms. These changes, alongside the ongoing impact of the Economic Crime and Corporate Transparency Act 2023, signal a move towards a more stringent, transparent, and consistently enforced AML regime.

By proactively understanding these amendments, adapting your compliance frameworks, and embracing digital solutions, your practice can not only meet new regulatory demands but also reinforce its commitment to combating financial crime. The time to prepare is now, ensuring your firm is well-equipped for the future of UK AML compliance.