FCA

Financial Conduct Authority (UK)

Medium Impact

FCA increases scrutiny of Annex 1 firms for AML registration and financial crime controls

Published

Aug 6, 2026

Topics

Anti-money laundering, Financial crime, Annex 1 firms, Registration, Unregulated lending, Counterparty due diligence

Executive Summary

The FCA has announced increased scrutiny of Annex 1 firms because of financial crime concerns in activities such as unregulated lending, safe custody, money broking and financial leasing. The statement does not create a new rule or implementation deadline, but it signals a more intensive supervisory approach to firms that must be registered with the FCA for anti-money laundering purposes under the Money Laundering Regulations. Firms carrying on relevant activities without registration are told to submit an application, and applicants should expect longer registration timelines because they must clearly demonstrate compliance capability. The FCA also highlights control weaknesses where firms rely too heavily on parent-company frameworks or off-the-shelf procedures that are not tailored to their own risks, governance and operations. The FCA has sent information requests to around 900 Annex 1 firms, following work with 300 firms in late 2025, and says this means all registered Annex 1 firms will have been contacted. Regulated counterparties should continue enhanced due diligence and directly confirm Annex 1 firms’ registration status.

What Changed

modifiedHigher scrutiny of Annex 1 AML registration applications

The statement does not specify a prior application review standard or processing timeframe.

New

Annex 1 registration applications should be expected to take longer and to require clearer evidence of AML compliance capability.

modifiedFirm-specific financial crime controls expected

The FCA observed that some firms relied too heavily on parent-company controls or off-the-shelf procedures.

New

Controls must be tailored to the individual firm's operating model and the specific risks it manages.

newSector-wide information request

The FCA had previously undertaken work with 300 Annex 1 firms in late 2025.

New

The new request means the FCA says it will have contacted all registered Annex 1 firms.

modifiedCounterparty due diligence emphasis for regulated firms

The FCA had recently highlighted risks to regulated firms doing business with Annex 1 firms.

New

Regulated firms should continue due diligence and directly confirm Annex 1 registration status.

newFocus on complex unregulated lending structures

No specific prior position on these structures is described in the supplied statement.

New

The FCA is using information requests and other intelligence to identify and disrupt financial crime risks in the sector.

Business Impact

Who is affected

Directly affected

UK Annex 1 firms including unregulated lenders, safe custody providers, money brokers, financial leasing companies, firms applying for FCA AML registration, and registered Annex 1 firms receiving FCA information requests.

Indirectly affected

regulated firms, group parent companies, SPVs, compliance service providers and business units that onboard, fund, arrange, administer or monitor relationships with Annex 1 firms.

Jurisdictions

United Kingdom

Business processes

FCA AML registration application preparation and submission, FCA information request response management, Financial crime business-wide risk assessment, Group financial crime control governance and local tailoring, Counterparty due diligence and registration-status verification, Unregulated lending and SPV transaction approval controls

Estimated effort

Medium

Compliance risk

Medium

Affected Reports

Annex 1 AML registration application pack and supporting evidence fileFCA Annex 1 information request response and attestation packFirm-specific financial crime risk assessment and control-mapping documentGroup AML reliance assessment and local-procedure tailoring recordCounterparty due diligence checklist and Annex 1 registration confirmation log

Field	Validation rule

Recommended Actions

7 suggested next steps· derived from source analysis

1
AI generatedStep 1 of 7
Confirm whether any UK business line, SPV or group entity conducts Annex 1 activities requiring FCA AML registration, and prepare an application if activities are being carried out without registration.
2
AI generatedStep 2 of 7
For pending or planned Annex 1 registration applications, strengthen evidence on governance, risk assessment, controls, resourcing and monitoring because the FCA says applications will receive closer scrutiny and may take longer.
3
AI generatedStep 3 of 7
Review parent-company and group AML frameworks to evidence why they are appropriate locally; where gaps exist, tailor procedures to the Annex 1 firm's actual products, customers, delivery channels and transaction structures.
4
AI generatedStep 4 of 7
Create a controlled response process for FCA Annex 1 information requests, including ownership, data sources, sign-off and consistency checks across business model, activity and risk information.
5
AI generatedStep 5 of 7
Update regulated-firm onboarding and periodic review procedures to require direct confirmation of Annex 1 registration status before relying on a counterparty relationship.
6
AI generatedStep 6 of 7
Review unregulated lending structures, including SPVs, for financial crime, consumer and market-risk indicators and escalate higher-risk structures for compliance approval.
7
AI generatedStep 7 of 7
Maintain board or senior management reporting on Annex 1 registration status, FCA information requests, overdue remediation and material counterparty exposure.

Timeline

other

2025

In late 2025, the FCA carried out work with 300 Annex 1 firms, which the current information request follows.

Sources

AI-generated analysis is based on the following primary sources. Always verify against the official publication.

News statementFinancial Conduct AuthorityDate not specified
FCA applying increased scrutiny to Annex 1 firms ↗
https://www.fca.org.uk/news/statements/fca-applying-increased-scrutiny-annex-1-firms
Regulatory guidance webpageFinancial Conduct AuthorityDate not specified
Annex I financial institutions ↗
https://www.fca.org.uk/firms/financial-crime/annex-1-financial-institutions
Registration guidance webpageFinancial Conduct AuthorityDate not specified
Register or update your details for money laundering supervision ↗
https://www.fca.org.uk/firms/financial-crime/money-laundering-terrorist-financing/register
UK statutory instrumentlegislation.gov.ukJun 22, 2017
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ↗
https://www.legislation.gov.uk/uksi/2017/692/contents

Related Evidence

Verified source support for this analysis

The evidence agent checks whether the drafted finding is supported by official publications and relevant public source material.

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