We are reminding regulated firms they need to undertake proper checks when dealing with unregulated lenders, safe custody providers, money brokers and financial leasing companies – also known as 'Annex 1' firms.
There are around 1,200 of these firms registered with us for solely anti-money laundering purposes. Our powers are currently limited to looking at how these firms are meeting their anti-money laundering obligations and they are not subject to our wider rulebook.
This regime is based on registration and is different from the authorisation regime under the Financial Services and Markets Act. For example, our wider conduct rules do not apply to these firms, nor are customers of Annex 1 firms able to access the Financial Ombudsman Service.
When dealing with Annex 1 firms, regulated firms must do their due diligence to understand the firm’s business, in accordance with legislative requirements. This would include seeking direct confirmation from the firm of their registration status, conducting independent checks of the information they provide, and understanding and managing any risks, for instance those detailed in the 2025 National Risk Assessment[1].
We raised concerns about anti-money laundering standards directly with the Annex 1 businesses in a letter to CEOs[2] in 2024. We continued our proactive and reactive work in this area, which led us to follow up with 300 firms in late 2025.
We are aware of some cases where consumers have been encouraged to set up limited companies to access lending, such as unregulated bridging finance from Annex 1 firms. It is important these consumers understand they will not have access to the Financial Ombudsman Service if things go wrong.