FCA to Take Over AML Supervision: Is It Time NI Firms Went Digital?
Anti-money laundering supervision for the legal profession is changing hands, and for Northern Ireland solicitors, it raises a question that goes beyond who's holding the regulatory pen. As oversight moves towards a more data-driven, evidence-based regulator, firms still running AML compliance through paper files and spreadsheets are facing a harder question: is it time to go digital? Below, we unpack what's changing, what it means for NI practices specifically, and how we're helping firms get ahead of it.
In June 2026, HM Treasury confirmed that the Financial Conduct Authority (FCA) will become the single AML/CTF supervisor for legal and accountancy service providers, taking over from professional body supervisors including, specifically, the Law Society of Northern Ireland. The Law Society is currently the sole designated AML supervisory authority for the solicitors' profession here, and it's named directly in Treasury's reform plans as one of the bodies being replaced. That makes this a live issue for every COLP, compliance officer, and managing partner in the jurisdiction, not just something to file away as "GB news."
What's actually changing
The Financial Services and Markets Bill, introduced to Parliament in May 2026, contains the clauses enabling the transfer of AML/CTF supervision away from bodies like the SRA, the Law Society of Scotland, and the Law Society of Northern Ireland, and towards the FCA. The Office for Professional Body AML Supervision (OPBAS) the body that currently oversees professional body supervisors, will be wound down once the transition is complete.
Three changes are worth flagging for NI practices in particular:
A new "fit and proper" regime. Regulation 58 of the Money Laundering Regulations gives supervisors power to assess the "integrity, competence and compliance history" of a firm's beneficial owners, officers and managers. Solicitors already go through character and suitability checks but under the new regime, firms may face a second, FCA-administered layer of scrutiny on top of that. The Law Society and other professional bodies have pushed back on this as duplicative, but the government hasn't committed to removing it.
A new fee structure. The FCA's AML supervisory work will be funded on a full cost-recovery basis. For sole practitioners and smaller NI firms in particular, that raises real questions about what supervision will cost on top of existing Law Society fees, before any duplication is resolved.
A genuinely different supervisory culture. The FCA already supervises everything from major financial institutions down to small businesses. It's a different regulator, with different expectations, different reporting norms, and, realistically different levels of patience for AML frameworks that exist on paper but aren't consistently applied in practice.
There's no fixed date, but there is a clear direction
Implementation timelines haven’t been established, but the consistent message is that this will take years rather than months, likely with a phased transition likely stretching well beyond 2027. That's not a reason to wait. HM Treasury and the professional bodies themselves have said as much: firms already operating to a high AML standard will be far better placed to manage the transition, whenever it lands, than those relying on policies that sit untouched in a manual.
Dual regulation, which poses the risk of firms navigating both a new FCA framework and continuing Law Society obligations during the transition was one of the more prominent concerns raised in the Treasury consultation. It’s a UK-concern and NI firms are not exempt: nobody, including the regulators, has fully worked out how that will operate in practice yet.
So, is it time NI firms went digital?
This is where the direction of travel matters as much as the destination. Whatever the final supervisory architecture looks like, every version of it points towards the same expectation: firms need to be able to evidence their AML compliance, consistently, across every client file, not just describe it in a policy document.
That's a genuine operational challenge for a lot of NI practices, particularly smaller firms and sole practitioners, where CDD and onboarding are still handled through a patchwork of paper files, email chains, and manually maintained spreadsheets. It's slow, it's inconsistent between fee earners, and, critically, it's hard to produce a clean audit trail when a regulator - whichever one it ends up being comes asking.
This is a big part of why regulatory technology (regtech) is moving from "nice to have" to genuinely relevant for the legal sector right now. Platforms built specifically for legal AML/CDD workflows can:
Standardise onboarding and due diligence so every client file follows the same risk-based process, regardless of which fee earner is running it.
Automatically generate and retain the audit trail that a supervisor (FCA or otherwise) will expect to see.
Flag source-of-funds and beneficial ownership issues at the point of onboarding, rather than catching them in a file review months later.
Reduce the manual burden on smaller firms who don't have a dedicated compliance team to fall back on.
None of this removes the need for solicitors and COLPs to understand why a client presents risk, that judgement stays firmly a human, legally-trained responsibility. But the mechanics of capturing, storing and evidencing that judgement are exactly the kind of repetitive, document-heavy work that technology is well suited to taking off a fee earner's plate.
Given that "fit and proper" scrutiny, cost pressure, and a more rigorous supervisory culture are all converging on the profession at roughly the same time, firms that get ahead of this now, by tightening up their onboarding processes and looking seriously at where technology can support (not replace) their compliance function will be in a materially stronger position than those waiting for the FCA's handbook to land before they act.
What NI firms should be doing now
Audit your current AML/CDD process end to end - not just the policy document, but what actually happens when a new client walks in the door.
Identify where inconsistency creeps in - usually between fee earners, between offices, or between "urgent" and "routine" matters.
Review governance of your beneficial owners, officers and managers now, ahead of any fit-and-proper assessment
Start budgeting for the possibility of dual costs during any transition period
Explore whether your onboarding and CDD workflow could be digitised - even partially, to build the audit trail regulators will expect.
Keep watching this space - both at Westminster level and via the Law Society of Northern Ireland, which will be central to how any transition actually plays out.
Piloting a better way to onboard
We've spent years inside AML compliance for Northern Ireland practices first-hand, not from the outside looking in. What we've consistently seen is that firms aren't short on knowledge of what good compliance looks like, they're short on tools that make it easy to do consistently, file after file, without adding hours to a fee earner's week.
That's the gap we've built a solution for, a purpose-built onboarding and RegTech platform designed specifically for legal practices in Northern Ireland.
We're now looking for a small number of NI practices to come on board as pilot partners ahead of a wider launch. Pilot firms get early access, a direct hand in shaping how the platform develops, and hands-on support getting it embedded into their existing workflow at no cost during the pilot phase.
If you'd like to find out more or register interest in taking part, get in touch at info@kycireland.ioand we'll arrange a time to talk through what's involved.
This article is provided for general information and does not constitute legal or regulatory advice. Firms should seek advice specific to their circumstances.
