Bribery, fraud and anti-money laundering | UK Regulatory Outlook September 2026

FCA publishes statement on increasing scrutiny of Annex 1 firms

The Financial Conduct Authority (FCA) has published a statement highlighting concerns about financial crime risks among Annex 1 firms, including unregulated lenders, safe custody providers, money brokers and financial leasing companies. The regulator emphasised that such firms must be registered for anti-money laundering purposes.

In particular, the FCA is concerned that firms are over-relying on the financial crime controls of their parent company. Each individual firm must independently assess whether controls are appropriate for its financial crime risks, governance and operations.

In response to these risks, the FCA is closely scrutinising Annex 1 firm registration applications and has issued information requests to approximately 900 Annex 1 firms to better understand their activities and risk profiles. It intends to use the responses, together with other intelligence, to identify and address wider financial crime risks across the sector.

Annex 1 firms and their parent companies should review existing controls and ensure that each individual firm has its own tailored financial crime risk assessment in place, rather than relying solely on group-level frameworks.

FCA publishes review of financial crime controls at asset management and alternatives firms

The FCA has published findings from its review of financial crime systems and controls across 242 firms in the asset management and alternatives sector.

The review assessed firms' controls against the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (MLRs 2017), relevant provisions of the FCA Handbook, the Joint Money Laundering Steering Group guidance and Financial Action Task Force (FATF) guidance.

Key findings include:

• Inherent risks. The FCA found that certain firms, particularly those active in private markets, are exposed to heightened financial crime risks. These risks are compounded by factors such as complex cross-jurisdictional ownership structures, high-risk customers and international transactions. The FCA expects firms with elevated risk profiles to have robust frameworks and appropriate controls in place to mitigate these risks, in line with the MLRs 2017 and the Senior Management Arrangements, Systems and Controls (SYSC) section of the FCA Handbook.
• Control risks. The FCA found that some firms appeared to underestimate their inherent financial crime risks and had consequently adopted an informal approach to evaluating and managing them. The review sets out examples of good and poor practice across a number of areas, including business-wide risk assessments, customer risk assessments, customer due diligence and enhanced due diligence, ongoing monitoring, sanctions screening, governance and training.

The FCA has encouraged firms to review their business models against its findings and address any gaps in their financial crime control frameworks. It has indicated that it will continue to monitor firms' responses as part of its ongoing supervisory activity.