Practical anti-money laundering support for FCA-registered lenders, leasing firms, money brokers and other Annex 1 firms, as the FCA moves from light-touch registration to active supervision.
Annex 1 firms carry out activities such as lending, financial leasing, safe custody services and money broking without needing full FCA authorisation. Instead, they are registered with the FCA for anti-money laundering supervision under the Money Laundering Regulations. For years, that registration attracted relatively little scrutiny. That is changing.
In March 2024, the FCA wrote to all registered Annex 1 firms setting out common control failings: business models that had outgrown their controls, generic risk assessments, unclear due diligence procedures and under-resourced financial crime functions. The collapse of bridging lender Market Financial Solutions in early 2026 added urgency, and in August 2026 the FCA sent an AML questionnaire to around 900 Annex 1 firms, completing its coverage of the whole population.
The questionnaire is a way of finding outliers. Firms whose answers are thin, inconsistent or reveal gaps are likely to hear more from the FCA, and the banks that fund their lending are asking harder questions too. Clarionet Consulting helps Annex 1 firms put proportionate, well-documented financial crime controls in place, and show that they work. You can read more about the background in our article Registered, but not authorised.
Clarionet Consulting is founded and led by Gary Watson, who spent nine years as Head of Compliance and MLRO for a UK bank, sitting on its Financial Crime Steering Committee. Before that, he spent five years in financial crime advisory at Deloitte, including large-scale remediation work for major banks.
That means we understand what the FCA expects to see, and what a bank funding your lending is looking for when it asks about your controls. Our approach is proportionate: controls that fit the size and risk of your business, written in plain English, that your team will actually use.
Some firms need a focused gap analysis and a remediation plan they can deliver themselves. Others need hands-on help rebuilding their risk assessment and policies, or ongoing nominated officer support through a fractional MLRO arrangement. We start with a free, no-obligation conversation about your business and what the FCA has asked, then propose a fixed-fee project, day-rate support or a monthly retainer.
An Annex 1 firm carries out activities listed in Annex 1 of the Capital Requirements Directive, such as lending, financial leasing, safe custody services or money broking, without needing full FCA authorisation for those activities. Because they fall within scope of the Money Laundering Regulations, they must register with the FCA, which supervises them for anti-money laundering purposes.
Assume the FCA will compare your answers against the rest of the sector. Check that what you told the FCA matches what is actually documented and happening in the business, close any gaps you identified, and keep a clear record of the steps you have taken. If the FCA comes back with follow-up questions or asks for a meeting, you will be in a much stronger position.
Annex 1 firms sit outside the Senior Managers and Certification Regime, so there is no SMF17 approval process. However, the Money Laundering Regulations still require a nominated officer to receive internal suspicious activity reports and decide whether to report to the National Crime Agency. That person needs the seniority, time and knowledge to do the role properly, and a fractional appointment can provide that.
Firms whose answers are thin or inconsistent can expect follow-up questions, meetings or visits, and in some cases an independent review of their financial crime controls. Where problems are serious, the FCA can take enforcement action, including fines or cancelling a firm’s registration, which for a lender would effectively end the business.
Yes. Following the FCA’s warning to regulated firms about the risks of dealing with unregulated lenders, banks and other funders are asking Annex 1 firms harder questions about their financial crime controls. We can help you put together clear, evidenced answers backed by a documented control framework.
If you would find it useful to have a sounding board on the FCA’s questionnaire, your current controls or where to focus next, we are always happy to have an initial conversation, free of charge and with no obligation.