FCA Restricts Six UK Lenders Following Concerns Over Anti-Money Laundering Controls

The UK Financial Conduct Authority (FCA) has imposed business restrictions on six unregulated lenders following concerns about the effectiveness of their anti-money laundering (AML) policies, controls and procedures. The measures limit the firms’ ability to take on new customers, enter into new lending arrangements and, in certain cases, receive payments from existing customers.

The restrictions were announced on 23 October 2026 and were imposed at the firms’ own request while the regulator assessed their applications for registration under the UK Money Laundering Regulations. The FCA stated that the measures form part of its enhanced supervisory approach to businesses operating within the so-called Annex 1 category.

The six firms are Kingscrown Finance Ltd, MOMSB Ltd, Momentus Capital Ltd, Grosvenor Funding Ltd, Grosvenor Funding (North West) Ltd and Abbital Ltd.

The FCA emphasised that the restrictions differ between firms and were introduced on different dates. The regulator has not announced financial penalties or concluded that the companies committed money-laundering offences. Its stated concerns relate to the adequacy of their AML frameworks and their ability to demonstrate effective management of financial crime risks.

Restrictions Differ Across the Six Lenders

Kingscrown Finance Ltd was first subject to voluntary restrictions on 21 April 2026, with additional measures imposed on 25 September. The latest conditions limit the ways in which the company may receive payments from existing customers and require an orderly wind-down of its existing loan book.

MOMSB Ltd and Momentus Capital Ltd accepted restrictions on 7 October 2026. The measures generally prevent the firms from taking on new customers or entering into new lending arrangements, subject to limited exceptions. They also restrict the circumstances in which payments may be accepted from existing customers and require independent reviews of the firms’ AML frameworks.

Grosvenor Funding Ltd and Grosvenor Funding (North West) Ltd were restricted on 9 October. Their conditions prevent new customer relationships and new lending arrangements, limit the circumstances in which existing-customer payments may be received, and require independent assessments of their AML frameworks.

Abbital Ltd accepted restrictions on 15 October. The conditions specify when the company may take on new customers, enter into new lending arrangements or accept payments from existing customers. The firm must also arrange an independent review of its AML systems and controls.

The FCA has not published detailed findings identifying the specific deficiencies at each company. The restrictions should therefore not be interpreted as establishing that all six firms had identical weaknesses or were subject to the same operational limitations.

Annex 1 Firms Under Increased Regulatory Scrutiny

The firms fall within the Annex 1 category under the UK Money Laundering Regulations. This category includes certain unregulated lenders, safe custody providers, money brokers and financial leasing businesses.

Annex 1 firms must register with the FCA for anti-money laundering supervision where they carry out activities covered by the regulations. However, registration does not constitute authorisation under the broader UK financial services regulatory regime.

The distinction is important for both firms and their customers. Annex 1 businesses are subject to the FCA’s AML supervisory powers but are not automatically subject to the regulator’s wider conduct requirements. The FCA has also previously warned that customers dealing with these firms may not have access to the Financial Ombudsman Service in relation to their unregulated activities.

The regulator has stated that Annex 1 firms must demonstrate that their financial crime controls are tailored to their individual business models, operations and risk exposure. It has raised concerns about businesses relying excessively on parent-company controls or generic procedures designed for other entities.

The FCA’s supervisory approach is intended to ensure that AML arrangements are effective in practice rather than merely documented. Firms are expected to understand their customers, products, transaction flows and governance responsibilities, and to demonstrate that their controls are capable of identifying and managing relevant risks.

FCA Expands Review of Registered Businesses

The latest restrictions form part of a wider examination of the Annex 1 sector. The FCA has been assessing responses to an information request sent to approximately 900 registered firms to improve its understanding of their activities, business models and financial crime exposure.

The exercise follows earlier supervisory work involving around 300 firms in late 2025. The FCA has stated that it will use the information collected, together with other intelligence, to identify and disrupt financial crime risks and determine where further intervention may be necessary.

The regulator has also reminded authorised firms that they must conduct appropriate due diligence when dealing with Annex 1 businesses. This includes obtaining direct confirmation of a counterparty’s registration status, independently checking information provided by the firm, and understanding and managing the risks associated with the relationship.

The FCA stressed that AML registration should not be treated as a substitute for a regulated firm’s own due diligence obligations.

Implications for Compliance and Risk Management

The restrictions highlight the importance of effective AML governance among businesses operating outside the FCA’s broader authorisation regime.

For lenders, the supervisory message is that AML controls must be proportionate to the nature and complexity of the business. Risk assessments, customer due diligence, transaction monitoring, governance arrangements and compliance resources should reflect the firm’s actual activities and exposure.

For banks, payment providers and other regulated counterparties, the FCA’s reminder reinforces the need to assess Annex 1 businesses individually. A registration record alone does not establish that a counterparty’s financial crime controls are adequate or that its business activities fall within a particular risk profile.

The FCA has not announced a timetable for lifting the restrictions. The independent reviews required for five of the firms will provide further information about their AML frameworks, but the regulator has not stated that those reviews have been completed or that any particular outcome is assured.

The intervention forms part of the FCA’s continuing efforts to strengthen oversight of unregulated financial businesses subject to AML supervision. The regulator has indicated that firms unable to demonstrate effective management of money-laundering risks may face restrictions on their operations while their compliance arrangements are assessed.

By fLEXI tEAM