UK regulator wants AI agents to police 60,000 law and accounting firms
Key Points
- The FCA is exploring AI agents to help supervise law and accounting firms
- It takes on AML oversight of 60,000 firms from late 2028
- Its systems already process more than 56 million records a day
- Smart said AI will strengthen, not replace, human judgment
- The regulator promised a risk-based approach with less duplication
The Financial Conduct Authority (FCA) is exploring the use of AI agents to help supervise the 60,000 law and accounting firms it will take on for anti-money laundering checks from late 2028.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, set out the plans in a speech at the Law Society Economic Crime Conference on 17 September.
The regulator’s intelligence systems already process more than 56 million records every day and flag high-risk firms earlier than they could before, Smart said.
“Looking ahead, we’ll keep exploring what technology can offer, including the potential for agentic supervision – something we’re looking at more broadly across the FCA,” said Smart.
“Of course, AI doesn’t – and won’t – replace human judgment. But it can strengthen it,” he added.
The FCA will begin taking responsibility for anti-money laundering supervision of the legal and accounting sectors at the back end of 2028, covering around 60,000 entities.
Smart said the regulator is already working with the Professional Body Supervisors that currently oversee those sectors and engaging some of the firms it will regulate.
He acknowledged concern in both sectors about whether a regulator built for banks and asset managers can understand how law and accounting firms operate.
The FCA employs almost 400 practising lawyers, Smart said, but he accepted that understanding the law is not the same as understanding how those firms work.
How the FCA plans to supervise the new firms
Smart said the regulator will not take a one-size-fits-all approach and will focus on whether a firm’s core anti-money laundering controls match the risks it faces.
“In other words, creating friction for the criminals. And letting everyone else get on with their business,” said Smart.
The amount of information the FCA asks for will depend on the risk a firm presents, and the regulator will aim to cut duplication where it can.
Smart pointed to the FCA’s transaction reporting reforms as an example, which he said will cut firm costs by £100 million a year by removing reporting fields and duplicate requirements.
He also cited the decision to raise the Defence Against Money Laundering Suspicious Activity Report threshold to £3,000, which the FCA supported after industry said the old threshold generated too many low-value reports.
The FCA has spent the past year tightening its focus on Annex 1 firms, the businesses registered with it solely for anti-money laundering purposes.
Smart said the regulator identified weaknesses criminals could exploit in those firms, including over-reliance on parent company controls and complex lending structures, and is scrutinising new applications more closely.
Scale of the problem
Fraud accounted for nearly half of all crime in England and Wales last year, and estimates suggest criminals launder more than £100 billion through or within the UK each year, Smart said.
He said global instability and rapid technological change have made it easier than ever to commit both fraud and money laundering at scale.
The FCA is combining its own data with that of partners, including the National Crime Agency’s data fusion programme, to uncover organised crime activity within financial services.
Smart said adding intelligence from the legal and accountancy sectors to that mix will make the work more effective.
“If you’re trying to do the right thing, we’re not looking to catch you out. Our focus is on crime and criminals,” said Smart.
“But the small minority who enable crime should expect us to find them – and to face consequences,” he added.
