The UK's Financial Conduct Authority has warned that anti-money laundering supervision in professional services is failing, with law firms and accountants among 41,400 organisations suffering from inadequate oversight. The FCA's Office for Professional Body Anti-Money Laundering Supervision found that many supervisory bodies perform poorly, with enforcement lacking teeth to ensure compliance with minimum standards.

A particularly troubling case involved a legal sector body using AI to assess AML risks, which automatically assigns new firms a 'medium' risk rating due to insufficient data. This flaw means these firms rarely get reviewed, creating blind spots in the system. The FCA also criticized the 'dual role' of supervisory bodies as both membership organizations and regulators, which can hinder effective action.

The watchdog's critical assessment comes as the Treasury plans to transfer AML supervision from professional bodies to the FCA itself, a move that has sparked industry backlash. The FCA recently censured the Institute of Certified Bookkeepers for AML supervision failures, marking its first enforcement action in this area.