ICAEW carried out 36% more anti-money laundering reviews in 2025/26 and found fewer firms falling short, yet the fines it issued rose more than fivefold to £1,052,619. As Julia Penny reported in AccountingWEB, the total was driven by a few serious cases, including one fine of £735,000. For the owner of a small practice, the headline is less important than the question behind it: what does AML compliance really cost your firm, and are you paying for it in the right place?

The bigger picture: AML is becoming a margin issue

The report has some good news. ICAEW completed 1,608 reviews, up from 1,185 the year before. Non-compliant outcomes fell from 20.0% to 15.5%, while “generally compliant” results rose from 60.6% to 69.7%. Fully compliant outcomes, however, slipped from 19.4% to 14.8%. Most firms are doing adequately, but fewer are doing it well.

Of the 250 non-compliant outcomes, 163 led to informal follow-up and 87 to formal action. ICAEW issued 53 fines, up from 41, ranging from £350 to £735,000. Last year’s range was £240 to £31,700. Penny’s caution is worth repeating: the total reflects a handful of serious, higher-risk cases. Still, she notes that serious failings can bring fines of £10,000 to £20,000, and that extra costs such as external compliance reviews are common.

The bigger shift is structural. Supervision of accountancy firms is due to move to the FCA, with preparation expected in 2027/28 and firms transferring in tranches from late 2028. One of the stated reasons for the change is the criticism from the Office for Professional Body Anti-Money Laundering Supervision that professional bodies can be too lenient. Whether or not that’s fair, firms shouldn’t assume the education-first approach they know today will survive the move.

So AML is moving from an annual admin chore to a real line in the practice’s risk and cost base. Independent accounting firms feel that more than most, because they don’t have a compliance department to absorb it.

What independent accountants need to know

The most useful part of the report is where the problems were found, because it shows where to focus. The ICAEW’s data should be just as relevant to firms supervised by other bodies.

Ongoing customer due diligence is the weakest spot. It came up in 7.8% of reviews, down from 11.6% but still the highest rate highlighted. Firms need to check regularly, and document, that their information on clients is current, including when new office-holders are appointed or someone becomes a politically exposed person.

Firm-wide risk assessments, policies and training are slipping. Problems here appeared in around 5% of cases, slightly higher than last year. These are the documents every firm has and few revisit.

Basic checks still catch firms out. Reviewers often found information about clients through a simple online search that the firm seemed unaware of. Adding that search to onboarding costs minutes.

Smaller recurring items add up. Missing compliance reviews, gaps in PSC discrepancy reporting, weak client risk assessments and incomplete identification of beneficial owners all featured, at similar levels of around 4%.

The rules changed this summer. The Money Laundering Regulations and the CCAB guidance for the sector were both updated. ICAEW doesn’t expect a fundamentally different approach, but Penny suggests checking that all beneficial owners have their identity verified, and that any electronic ID service you rely on alone is on the government’s DVS register.

What forward-thinking practices are already doing

Efficient firms treat AML as a process to be designed rather than a burden to be endured. Their approach usually has four parts.

They put it into the workflow. Ongoing due diligence is triggered by events the firm already sees, such as the annual accounts job, a change at Companies House or a new engagement. It isn’t left to a separate exercise that nobody has time for in January. When the check is part of the job, it happens and it gets recorded.

They spend time in proportion to risk. Penny’s point is that knowing the common weaknesses lets firms concentrate on them, rather than giving every procedure the same level of detail. A risk-based process means a dormant company and a cash-intensive client with overseas ownership get different levels of attention.

They price compliance into the fee. Many practices treat onboarding and due diligence as unbilled overhead. Forward-thinking firms measure the hours involved, build them into minimum fees and include them in proposals. If a new client needs an hour of checks before any chargeable work begins, a very low-fee client may not be worth taking on.

They clear out clients who don’t fit. Every client adds to the due diligence burden. Firms that remove small, high-risk or unresponsive clients reduce both their exposure and their workload. Often, the clients who are slowest to supply ID are also the slowest to pay.

The calculation is simple enough to run this month. Take the partner and staff hours spent on AML last year, multiply by your charge-out rate, and compare that with the cost of a good compliance system or external review. Then add the cost of one bad review: a fine, a mandatory external review and the partner time spent dealing with both. For most firms, tidying up the process is the cheapest insurance available.

How this connects to growth

It’s easy to see compliance as the opposite of growth, but the two are connected. Accounting firm growth means nothing if each new client adds unpriced admin and hidden risk. Firms chasing volume through cheap bookkeeping leads can end up with a client list that costs more to supervise than it earns.

Better marketing for accountants helps here too. The aim isn’t more enquiries, but better ones. A website that sets out your minimum fee, explains your onboarding and asks for ID early will filter out the clients who cause trouble later. Clear onboarding pages also reassure good prospects, who increasingly expect a smooth digital process. In a crowded market, a professional, well-run start to the relationship is a selling point.

Lead generation for accountants works best when it’s focused on the sectors and client types your firm understands. If you know a sector, your risk assessment is sharper, your due diligence is quicker and your advice is worth more. Specialising improves your marketing and your compliance at the same time, which is a rare two-for-one in practice management.

Cleaner client data also pays off. Accurate records of owners, office-holders and business activities make it easier to spot advisory opportunities, segment your marketing and show a buyer or a regulator that the firm is well run.

Don’t wait for the FCA

The report’s message is that most firms are improving and that the serious penalties remain rare. It would be easy to read that and move on. That would be a mistake. Supervision is going to change hands, the largest fines have jumped, and fully compliant firms are becoming a smaller minority. The firms that get their processes right before the FCA arrives will spend less, worry less and have more partner time for the work that earns money.

No one wants to build all of this alone, and small practices shouldn’t have to. Independent practices that want to protect their margins are finding it easier to compare notes with peers who face the same pressures, while getting the marketing support that brings in the right clients. That’s the thinking behind the CharterGroup Alliance. If you’d rather face the next few years alongside other forward-thinking firms, see what becoming a member involves.

Published by the CharterGroup team