Regulatory Update December 2025

James Price

Hello everyone, and welcome to our December 2025 compliance and regulatory update. As we bring the year to a close, this month’s update focuses on two key areas: the publication of the government’s long-awaited consultation on the future of AML supervision, and the latest position on the SRA Accounts Rules. As always, I’ll be outlining what has changed, what is currently being proposed, and what firms should be thinking about as these developments continue to unfold.

James Price

I want to begin with AML supervision, where there has been a significant development since our November update. The government has now launched a formal consultation setting out the proposed move from professional body AML supervision to FCA-led supervision. This reform affects 22 existing AML supervisors across the professional services sector and means that, in the future, regulators such as the SRA and other legal regulators will no longer supervise firms for anti-money laundering. Instead, AML supervision will sit entirely with the Financial Conduct Authority.

James Price

The consultation, which opened on 6 November 2025 and runs until 24 December 2025, sets out how the transition from professional body supervision to FCA supervision would operate, as well as the longer-term supervisory framework. The government has been clear that this change will not be immediate, with the transition expected to take several years. As a result, the consultation focuses heavily on how that shift will be managed in practice and what the implications are likely to be for firms both during the transition period and once the FCA has fully assumed responsibility.

James Price

It also proposes substantial amendments to the Money Laundering Regulations to support the FCA’s expanded role. These include consolidating fit and proper tests for those who own, manage, or control regulated businesses, reviewing the scope of legal services covered by the MLRs, and transferring all AML enforcement powers to the FCA. Additional proposals include introducing a new penalty for failing to register for AML supervision, expanding the FCA’s powers to obtain information and direct action, moving sector-specific guidance to the FCA, enabling SARs and whistleblowing reports to be shared directly with the FCA, and streamlining appeals and registration processes. The consultation also considers cost recovery, potential reductions in regulatory duplication, and the continued role of OPBAS during the transition, with OPBAS expected to close once FCA supervision is fully established.

James Price

Turning now to the SRA Accounts Rules, the position remains largely unchanged from our previous update, but there are some important points to note. The SRA had previously indicated that a second consultation on proposed amendments to the Accounts Rules would be published at the end of October 2025. As of 4 December, no consultation has yet been released. However, the SRA has indicated that announcements are expected on or before 11 December.

James Price

Those announcements are expected to cover several key areas, including the role of the COLP and COFA in relation to the Accounts Rules, potential changes to reporting accountant requirements, and how the rules apply to sales, acquisitions, and mergers. These are all areas with practical implications for firms, particularly those undergoing structural change or reviewing their internal compliance arrangements. For those who would like a deeper analysis, Datalaw has a Reporting Accountant Update webinar available, which explores the policy development to date and some of the changes the SRA may consider.

James Price

As we draw this December update to a close, it’s clear that the regulatory landscape continues to evolve at pace. The AML consultation represents a fundamental shift in how firms will be supervised in the future, and while implementation will be gradual, firms should already be considering how FCA supervision may affect their compliance frameworks and resourcing. At the same time, we continue to await further clarity from the SRA on the Accounts Rules, with announcements expected shortly. Thank you for joining me for this December 2025 compliance and regulatory update. We’ll continue to keep you informed as consultations progress, decisions are finalised, and new rules begin to take shape.