FCA restricts six Annex 1 lenders over AML control concerns

Restrictions have been placed on six unregulated lenders, known as Annex 1 firms, after the industry watchdog raised concerns about their anti-money laundering (AML) controls while assessing their applications.

The restrictions were imposed by the FCA on each firm’s request and limit their ability to take on new customers or do new business with existing customers, including extending existing credit.

On 21st April 2026, voluntary restrictions were imposed on Kingscrown Finance Ltd, which provides BTL and HMO lending. Further voluntary restrictions, placed on 25th September 2026, limit how Kingscrown may receive payments from existing customers and require an orderly wind-down of its existing loan book.

On 7th October 2026, voluntary restrictions were placed on MOMSB Ltd and bridging lender Momentus Capital Ltd. These prevent the firms from taking on new customers or entering into new lending arrangements subject to limited exceptions, restrict the circumstances in which they may accept payments from existing customers, and require an independent review of their AML framework.

Bridging lending firm Grosvenor Funding Ltd and Grosvenor Funding (North West) Ltd saw similar voluntary restrictions imposed on 9th October 2026.

Voluntary restrictions for short-term finance provider Abbital Ltd followed on 15th October, specifying the circumstances in which it may take on new customers, enter into new lending arrangements, or accept payments from existing customers. The FCA has also called for an independent review of Abbital’s AML systems and controls.

The regulator said that Annex 1 firms operated in sectors that could present a heightened risk of money laundering and other financial crime and were required to register with the FCA for supervision under the Money Laundering Regulations. They are not authorised or subject to wider FCA regulation.

The watchdog previously warned Annex 1 firms they will be subject to “increased scrutiny” and will be required to demonstrate they understand the financial crime risks they face and have effective systems and controls in place to manage those risks.

There are said to be around 1,200 Annex 1 firms registered with the regulator for solely AML purposes.

In 2024, the FCA sent a letter to CEOs raising concerns about AML standards directly with Annex 1 businesses. This prompted the watchdog to follow up with 300 firms in late 2025.

The FCA is now assessing responses to an information request sent to around 900 registered Annex 1 firms to identify and disrupt financial crime risks and determine where further action is needed.

Regulated firms have been reminded that when dealing with Annex 1 firms, they must carry out due diligence to understand the firm’s business, in accordance with legislative requirements. This includes seeking direct confirmation from the firm of its registration status, conducting independent checks of the information it provides, and understanding and managing any risks.

Steve Smart, executive director lead for fighting financial crime at the FCA, said: “We have warned Annex 1 firms that they face increased scrutiny.

“They must demonstrate they can manage the money laundering risks they face. Where they cannot satisfy us, we will intervene.”

The FCA launched an investigation into MFS, which it classified as an Annex 1 business, in March this year.