HM Treasury is preparing for the UK’s 2027 Financial Action Task Force (FATF) mutual evaluation – a high-stakes international assessment of the UK’s anti-money laundering and counter-terrorist financing regime.

As part of that preparation, Treasury is inviting law firms to complete a survey to help build an accurate picture of how the legal sector manages its obligations. FATF mutual evaluations assess both technical compliance with the FATF’s 40 Recommendations and, crucially, the effectiveness of a country’s AML and CTF measures in practice. The UK’s last evaluation, conducted in 2018, found the UK had a well-developed regime but identified weaknesses in supervision — weaknesses the legal sector was specifically called out for. The 2027 evaluation will examine the progress made since then.

Why is this relevant to law firms?

The survey is particularly aimed at firms with exposure to terrorist financing and proliferation financing risks, although the findings will inform the broader picture presented to FATF assessors. The last UK FATF evaluation resulted in a number of recommendations for the legal sector and strong survey engagement from the profession helps demonstrate active compliance culture. The survey, which takes approximately 20 minutes to complete, asks firms for practical examples and data on: how they implement UN and UK sanctions updates (including screening processes and false-positive rates); proliferation financing risk assessments, controls, and procedures; case studies showing how the firm identifies and responds to proliferation financing or sanctions evasion risks; and awareness of the National Risk Assessments and how they inform the firm’s risk management. All responses are aggregated and anonymised so they will not be attributable to any individual firm.

This comes at a particularly important moment given that the government has also announced that the FCA will become the single AML supervisor for professional services, replacing the current SRA-led model. The 2027 FATF evaluation will be one of the first major international assessments under that new architecture.

Under the proposed reform, responsibility for AML supervision would shift from 22 professional body supervisors – including nine legal-sector regulators – to the FCA as a single independent authority. The FCA currently supervises around 17,000 firms for AML purposes; its remit would expand to cover approximately 60,000 firms, including 7,500 in the legal sector. HM Treasury consulted on this reform in late 2025, and firms should expect further detail on implementation timelines during 2026.

Why does this matter?

FATF evaluations are not simply academic exercises. A poor rating or significant recommendations can affect the UK’s international standing, create pressure for legislative change, and trigger more intensive domestic supervisory activity in the sectors identified as weak. In the run-up to 2027, firms that can demonstrate well-documented, risk-based compliance  through robust firm-wide risk assessments, evidenced source-of-funds checks, and active staff training  are contributing to the UK’s overall picture. Firms that cannot are a liability to it.

Actions for you:

• Complete the HM Treasury survey via the SRA’s website if your firm has exposure to terrorist financing or proliferation financing risks. The survey closes on 31 March 2026. The survey is accessible here and takes approximately 20 minutes. Even firms that do not consider themselves primarily exposed to terrorist or proliferation financing risk may find the process useful as a prompt to review and document their controls.
  
  
• Treat this as an opportunity to demonstrate your firm’s compliance culture ahead of the transition to FCA supervision. The FCA’s supervisory approach is widely expected to be more intensive and data-driven than the current SRA model. Firms that engage proactively with the FATF preparation process — and that can evidence robust controls when asked — are better placed for the supervisory transition ahead.