By PAUL O’DONOGHUE, Senior Correspondent
THE UK’s Financial Conduct Authority (FCA) is changing its approach to compliance to emphasise the effectiveness of AML measures, the watchdog has said.
Beth Harris, the FCA’s Head of Financial Crime, said that it will now expect companies to demonstrate how their compliance measures stop criminal activity.
“For too long, financial crime frameworks have sometimes rewarded activity rather than effectiveness,” she said during a speech at ‘International Anti-Financial Crime Summit 2026’ (IAFCS 2026).
“A firm could point to its policies, processes, and controls without demonstrating clearly whether they are preventing harm. This is changing.
“The FCA is increasingly focused on outcomes, whether control operates effectively in practice, and whether weaknesses are redressed before they can be exploited.”
Harris also warned companies about ineffective AML rules which are only “controls on paper”.
“A process that is not tested will not protect consumers, and a framework that measures activity without examining results can create reassurance without resilience,” she said.
“Effectiveness means looking beyond whether a firm has carried out a task. It means understanding whether that task has made it harder for criminals to enter, use, or exploit the financial system.”
FCA and AML controls
The comments come as the FCA continues to change how it tests companies’ AML controls. Earlier this year the firm imposed restrictions on BeAccount Ltd, an authorised electronic money institution which trades under the name Payine.
It was not satisfied that the firm “had the operational effectiveness and adequacy required” to identify, manage, monitor and report financial-crime risk. Due to this, the FCA stopped the firm from carrying out payment and e-money services and required that it return funds to customers.
The FCA is set to become the primary AML regulator for UK professional services firms by the end of 2028.
The reform will replace the current system, which includes HMRC, the FCA, the Gambling Commission and 22 professional body supervisors.
Under the new plans, the FCA will become the main AML supervisor of the legal, accounting and corporate services sectors.
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