The Regulatory Change That Is Not About MTD
Ask a UK practice owner what is on their compliance radar this year and the answer is almost certainly Making Tax Digital. Quarterly updates, non-digitalised clients, phase two in April 2027. It is a reasonable answer, because that is where the immediate deadlines sit.
But while the profession has been absorbed by quarterly filing, a second change has quietly moved from proposal to settled policy. Anti-money laundering supervision for accountancy practices is being taken away from professional bodies and handed to the Financial Conduct Authority. There is no fixed go live date yet, which is exactly why it is being ignored. It is also exactly why now is the cheapest time to prepare.
What Has Actually Been Confirmed
In October 2025 the government announced that the FCA would become the single professional services supervisor for AML and counter-terrorist financing. In June 2026, HM Treasury published its response to the consultation on supervision reform, duties, powers and accountability. That response settled the policy position.
The headline points are these:
- The FCA will become the single AML and CTF supervisor for accountancy service providers, legal service providers and trust and company service providers.
- The 22 professional body supervisors will lose their AML supervisory role. OPBAS will cease to exist once the reform is complete.
- The FCA will register in-scope firms and maintain a public register, giving a single authoritative source of which firms are permitted to carry out in-scope work.
- Existing enforcement powers under the Money Laundering Regulations 2017 will be extended to the FCA, including civil sanctions and, where appropriate, criminal proceedings.
- Supervision will be funded by supervised firms on a full cost recovery basis, with the fee model subject to a separate FCA consultation.
Crucially, the underlying law is not changing. Your duties still come from the Money Laundering Regulations and the Proceeds of Crime Act. What changes is who is looking, how often, and how hard they push.
Timing: Why "No Date Yet" Is Not the Same as "No Rush"
HM Treasury has been candid that implementation "will inevitably take several years". The Financial Services and Markets Bill is in Lords Committee stage, and FCA rules, registration mechanics, fee bands and transition arrangements are all still to come. In the meantime, OPBAS continues to operate and your existing supervisor keeps its responsibilities.
Sector commentators are treating 2028 to 2029 as a sensible planning horizon rather than a confirmed commencement date. The FCA has already started practical discovery work. In April 2026, ICAEW reported that the FCA had invited firms and sole practitioners to take part in confidential one to one research sessions about their experience of AML supervision.
So the honest position is this. Nothing lands on your desk next quarter. But the work that will make the transition painless is work that takes eighteen months to do properly and cannot be done in a fortnight.
What Will Actually Feel Different
Practices that have only ever dealt with a professional body should expect a different supervisory culture. Professional bodies are membership organisations as well as supervisors, and OPBAS has repeatedly flagged inconsistency and weak deterrence across parts of the current system. That tension is a large part of why the government has moved to a public sector model.
The FCA's approach is risk based and data driven. In practice that means:
- Structured information requests rather than an annual return and an occasional visit.
- Desk based and on site reviews, thematic work, and the ability to require skilled person reviews.
- A focus on demonstrable control effectiveness, meaning proof that your policies are actually applied, not simply that they exist as documents on a shared drive.
- Direct reporting lines to the FCA for AML, while your professional body continues to regulate wider professional standards.
That last point is the one that generated the most pushback during consultation. Firms worried about dual regulation and being investigated twice for the same issue. The government has acknowledged the concern but declined to legislate on regulatory primacy, opting instead for a statutory duty to cooperate and share information between the FCA and professional bodies. How that works in practice is still to be seen.
The Fit and Proper Test Most Firms Have Not Noticed
Here is the element that deserves more attention than it is getting. Regulation 58 fit and proper requirements will be extended to accountancy and legal service providers for the first time.
Regulation 58 allows a supervisor to assess more than criminal convictions. It reaches integrity, competence and compliance history, and it applies not just to the firm but to its beneficial owners, officers and managers, often abbreviated to BOOMs. Accountancy practices have not previously faced this, because professional bodies carried out their own suitability assessments under separate frameworks.
Practically, that means partners, directors and anyone in a relevant governance role may need to demonstrate a clean and documented compliance history. If your firm has an unresolved supervisory issue, a pattern of late returns, or governance roles that exist on paper but not in reality, that is worth addressing well before someone else looks at it.
Costs Will Rise, and the Messiest Files Will Pay the Most
The government has confirmed cost recovery funding but the fee model is not set, so treat any published estimate with caution. Professional bodies have warned about dual fee pressure, since FCA charges may arrive without a matching reduction in existing practising or membership fees.
The direct fee, though, may not be the biggest number. The larger cost is internal time: familiarisation, registration or data confirmation, file clean up, training records, and responding to information requests. And that cost is not driven by firm size. It is driven by how traceable your evidence is. A sole practitioner with clean, well reasoned files will move through this more cheaply than a ten partner firm whose AML evidence is scattered across emails, folders and half remembered conversations.
Seven Things Worth Fixing in the Next Six Months
None of this requires waiting for the FCA rulebook. All of it improves your position under your current supervisor anyway.
- Name your nominated officer and document deputy cover. The role cannot be outsourced to an external consultant, and a sole trader with no employees must hold it personally.
- Rebuild the firm wide risk assessment so it is defensible. It should explain the risks arising from your specific clients, services and operating model, and it must take HMRC's published sector risk assessment into account. HMRC's guidance, updated in January 2026, rates accountancy service providers as high risk and singles out payroll, bookkeeping, insolvency and tax advice.
- Make policies operational, not decorative. Every policy statement should name the person responsible, the record kept and the evidence available.
- Standardise client risk assessment and CDD. One short risk form that captures ownership complexity, geography, service risk, delivery channel and red flags, plus consistent checklists for individuals, companies, partnerships and trusts.
- Harden the SAR process and keep decision records. A dated log showing the internal report, the checks done and the conclusion reached matters, because failure to disclose offences apply in the regulated sector.
- Make training auditable. Who attended, what was covered, when, and the result if you use a quiz. Training records are among the first things requested under an evidence led model, and Regulation 24 failures already appear in published disciplinary decisions.
- Fix record keeping now. Regulation 40 requires five years. The test is not whether documents exist somewhere but whether they can be retrieved and followed.
Build the Evidence Pack Before Anyone Asks
A useful exercise is to create one folder, or one workspace in your practice management system, containing your current firm wide risk assessment, your AML policies and procedures, the nominated officer appointment record and deputy note, your client risk assessment template with anonymised examples, your CDD checklists, your SAR workflow and decision log, your training plan and log, and your retention schedule with a sample audit trail.
Alongside it, keep a one page firm profile: legal and trading name, premises, current AML supervisor, services offered, any TCSP activity, owners and controllers, BOOMs, nominated officer, client risk mix and key systems used. Review it quarterly. The government's stated intention is that existing supervised firms should not need to complete a full re-registration, but they may need to confirm details and undergo fit and proper checks. Being able to do that in an afternoon rather than a fortnight is the whole point.
Three Assumptions to Retire
- "We are too small to matter." Published sanctions show sole practitioners and small firms losing licences or AML supervision for basic failures, including missed firm returns and unanswered supervisory requests under Regulation 66.
- "Payroll and bookkeeping are too low touch to count." CCAB guidance is clear that scope depends on the service provided. Advice, interpretation and defined accountancy or tax services bring you within scope regardless of how routine the work feels.
- "The documents exist somewhere." Under a supervisor that tests control effectiveness, an unclear evidence trail is functionally the same as no evidence.
The Quiet Advantage
There is a version of this change that is genuinely good news for well run practices. A single supervisor with a public register makes it harder for poorly controlled operators to sit at the margins of the system, and it removes the ability to shop between supervisors. Firms that already run tight AML processes will find the transition largely administrative.
The practices that will struggle are the ones that treat AML as an annual form filling exercise. They have roughly two years to change that, which sounds generous until you consider that MTD phase two arrives in April 2027 and will absorb most of the available attention in between.
The cheapest time to fix an AML file gap is before a supervisor asks about it. That window is open now, and it will not be open when the FCA arrives.
