Summary
On 7 August 2026, the Financial Conduct Authority (FCA) issued a Statement setting out that it is concerned about a number of risks among unregulated lenders, safe custody providers, money brokers and financial leasing companies (Annex 1 firms). These firms need to be registered with the FCA for anti-money laundering purposes. The FCA is concerned that such firms are relying too heavily on the financial crime controls of their parent company, and that they cannot rely on off-the-shelf procedures designed for a different company.
Key Facts
- FCA issued Statement on 7 August 2026 about risks among Annex 1 firms
- Annex 1 firms: unregulated lenders, safe custody providers, money brokers, financial leasing companies
- Firms need to be registered with FCA for AML purposes
- FCA concerned firms relying too heavily on parent company's financial crime controls
- Firms must assess whether parent's controls are appropriate for their risks, governance and operations
- Firms cannot rely on off-the-shelf procedures designed for a different company
- Each firm must have controls tailored to the way they operate and risks they manage
- FCA concerned about risks to consumers/markets from unregulated lending through complex structures including SPVs
- FCA closely scrutinising applications to register as an Annex 1 firm — expect applications to take longer
- FCA sent information request to around 900 Annex 1 firms
- Follows work with 300 Annex 1 firms in late 2025; will have contacted all registered Annex 1 firms
Why It Matters
The FCA's increased scrutiny of Annex 1 firms signals a tightening of AML oversight over the less-visible segments of the financial sector — unregulated lenders, safe custody providers, money brokers and financial leasing companies. The concern about reliance on parent-company controls and off-the-shelf procedures highlights a broader regulatory theme: financial crime controls must be tailored to each firm's actual operations and risks, not borrowed from elsewhere. The focus on unregulated lending through complex structures, including special purpose vehicles, reflects growing concern about the risks these structures pose to consumers and markets. For fintechs and financial institutions, the FCA's information requests to ~900 firms and slower registration timelines signal that compliance expectations are rising across the board, even for firms outside the traditional regulatory perimeter.