The announcement that AML supervision for professional services is expected to move to the FCA has sparked intense discussion across the legal sector. While timelines remain uncertain, one thing is clear: the direction of travel is towards greater scrutiny of systems, controls and data.
At HiveRisk, we recently hosted one of our most-subscribed webinars of the year to help law firms cut through the noise and focus on what really matters. Drawing on experience from both legal and FCA-regulated environments, our panel shared practical insights that firms can act on now – regardless of when the transition formally takes place.
Focus on today, while preparing for tomorrow
As Kate Burt, CEO of HiveRisk, reminded attendees, firms shouldn’t be distracted from their current obligations:
“Nothing is changing presently. This is about getting ready to get ready.”
The SRA, Law Society of Scotland and HMRC and other professional service regulators remain active supervisors, and the areas they are already scrutinising – risk assessments, controls, source of funds and evidence of decision-making – are precisely where the FCA is likely to focus first.
The message is simple: strengthening your AML framework today puts you in a better position under any regulator.
Firm-wide risk assessments must become genuinely “living”
A recurring theme was the central importance of the firm-wide risk assessment (FWRA). Eloise Butterworth, Head of Risk & Compliance at HiveRisk, highlighted a truth we see repeatedly in practice:
“We say ‘living, breathing document’ a lot in legal, but we don’t necessarily live it in reality.”
Under FCA supervision, the FWRA is expected to be more than an annual exercise (as is the expectation with current supervisors). It should be actively informed by what is happening across the firm – new work types, client profiles, rejected matters and audit findings.
“If firms can nail that living, breathing firm-wide risk assessment, they’re going to reap the rewards in their overall risk mitigation strategy,” Eloise added.
Action for firms: Build in regular triggers to review your FWRA and ensure it reflects real-world data, not assumptions.
Data, not guesswork, will underpin future supervision
Jo Adongo, Senior Technical Compliance Manager at HiveRisk, was candid about a common weakness across the sector:
“Currently, loads of firms tend to guess, unfortunately.”
From estimating referral sources to assessing jurisdictional risk, many decisions are still based on anecdote rather than evidence. This is where firms need to evolve.
Importantly, this doesn’t mean asking clients more intrusive questions. As Kate explained:
“It’s not about asking clients more intrusive questions – it’s about capturing internally what you’re already asking, in a way that can be analysed.”
Action for firms: Move away from Word and PDF-based risk assessments and ensure key AML data is captured in structured, reportable formats.
Controls must be real – and evidenced
Drawing on extensive FCA experience, Jason Mc Kinney outlined what law firms should expect from an FCA-style approach:
“The most notable shift will be systems and controls and the practical implementation of the regulations.”
Policies alone won’t be enough. Regulators will expect firms to demonstrate how controls operate, who owns them, and how their effectiveness is tested.
“The business-wide risk assessment is the cornerstone of any good financial crime framework,” Jason noted. “If you lay the foundations correctly, everything else becomes easier.”
Action for firms: Start mapping a clear controls library linked to AML obligations, supported by audit and quality assurance data.
The bottom line
The transition to FCA AML supervision won’t happen overnight, but the expectations are already taking shape. Law firms that act now – by strengthening data, governance and controls – won’t just be better prepared for the future; they’ll be more resilient and efficient today.
At HiveRisk, we’re proud to support firms through this journey with expert insight, practical tools and hands-on experience across both legal and other professional services sectors.
If you’d like to understand where your firm sits on the FCA readiness journey, our team is here to help.