FCA applying increased scrutiny to Annex 1 firms

Firms including unregulated lenders, safe custody providers, money brokers and financial leasing companies, need to be registered[2] with us for anti-money laundering purposes.

If you’re carrying out these activities without being registered, you should submit an application for registration.

We are concerned about a number of risks we’ve identified among Annex 1 firms, in particular the potential for them to facilitate financial crime.

We have seen firms rely too heavily on the financial crime controls of their parent company. Each individual firm within a group must assess whether these controls are appropriate for their financial crime risks, governance and operations. They also can’t rely on off-the-shelf procedures designed for a different company. Each must have controls tailored to the way they operate and the risks they need to manage.

We are also concerned about the risks to consumers and markets from unregulated lending often conducted through complex structures, including special purpose vehicles.  

We recently highlighted the risks[3] to regulated firms when doing business with Annex 1 firms. Regulated firms should continue to do their due diligence and understand the business of firms they are dealing with – including seeking direct confirmation of their registration status.  

To address these risks, we are closely scrutinising applications to register as an Annex 1 firm.  

Firms need to clearly demonstrate that they can comply with the money laundering regulations[4]. Firms should expect registration applications to take longer.

We have also sent an information request to around 900 Annex 1 firms to improve our understanding of their activities, business models and risks. This follows on from the work we did with 300 Annex 1 firms in late 2025 and means we will have contacted all registered Annex 1 firms. 

We will use this and other intelligence to identify and disrupt financial crime risks in this sector.