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Temu’s European headquarters in Dublin have been raided by EU regulators investigating a potential breach of foreign subsidy regulations.

The Chinese online retailer, which is already in the European Commission’s spotlight over alleged failures to prevent illegal content being sold on its app and website, was raided last week without warning or any subsequent publicity.

“We can confirm that the commission has carried out an unannounced inspection at the premises of a company active in the e-commerce sector in the EU, under the foreign subsidies regulation,” a commission spokesperson said on Thursday.

Temu was approached for comment.

Its headquarters are on St Stephen’s Green, one of Dublin’s most prestigious addresses. Neighbours include the five-star Shelbourne hotel and Cantor Fitzgerald, a US finance company.

The EU’s foreign subsidies regulation targets companies judged to have been given a competitive advantage through government subsidies.

The EU introduced tariffs of up to 38% on a series of Chinese car manufacturers last year after a long investigation under World Trade Organization rules. It concluded the companies were receiving direct and indirect subsidies from the Chinese government, including help shipping cars to Europe and in securing land for factories.

Temu, which has about 116 million monthly users in the EU, boasts it offers consumers the opportunity to “shop like a billionaire” by connecting them with “millions of sellers, manufacturers and brands with the mission to empower them to live a better life”.

The commission opened an investigation into Temu last year under its 2022 Digital Services Act, which governs online platforms.

Officials said in July that preliminary findings showed Temu was not doing enough to prevent the sale of illegal products. A Temu spokesperson said at the time: “Temu takes product safety and compliance very seriously. We have a system of seller vetting, proactive monitoring and responsive takedowns to prevent, detect and remove unsafe products.”

Concerns are growing about the trade relationship between the EU and China, with figures last month showing Germany was, for the first time, importing more from China than it was exporting.

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The extent of the imbalance was evident this week in figures showing that China’s global exports in the first 11 months of the year outpaced imports by more than $1tn (£750bn).

A significant portion of that surplus was generated by shipments to the EU, which last year ran a trade deficit with China of more than $350bn.

It is thought that manufacturers in China have been directing more goods to non-US markets in response to US tariffs, fuelling an export surge to Europe, Australia and south-east Asia.

This article provides a review of HM Treasury’s (the Treasury) consultation on assumption by the Financial Conduct Authority (FCA) of responsibility for Anti-Money Laundering (AML) supervision across professional services sectors.

The Treasury’s proposal represents a fundamental shift in the regulatory landscape, aiming to consolidate oversight under a single authority. This move responds to concerns raised by the Financial Action Task Force (FATF) regarding fragmented supervision and seeks to enhance consistency, accountability, and effectiveness. The following sections explore the key proposals, consultation questions, sector-specific impacts, gaps, and detailed timelines, which will be of interest to law firms and accountancy practices. Our analysis underscores the importance of proportionality and sector-specific expertise in implementing these changes.

Key Proposals

The Treasury’s proposals are ambitious and far-reaching. At their core, they aim to replace multiple professional body supervisors with a Single Professional Services Supervisor (SPSS). This consolidation is intended to eliminate inconsistencies and improve enforcement outcomes. 

Supervision

Enhanced supervisory powers for the FCA will allow for inspections, skilled person reviews, and enforcement actions, ensuring compliance with the Money Laundering Regulations (MLRs). The Treasury’s proposal will require law and accountancy firms to adjust to this additional source of regulatory supervision. Although intended to concentrate regulatory supervision in one regulator and plug gaps across the entire professional sector, it will nevertheless inevitably result in increasing the burden on professional businesses, which appears to be in opposition to the Treasury’s discourse on reducing said burden. For professional businesses that are already subject to particularly rigorous supervisory powers, such as audit firms regulated by the Financial Reporting Council, the additional regulatory burden of AML supervision by the FCA will be an unwelcome strain on existing resources.

Registration and gatekeeping

Other key elements of the Treasury’s proposal include registration and gatekeeping powers, enabling the FCA to maintain a public register and conduct fit-and-proper tests for beneficial owners and senior managers.

The consultation proposes a risk-based approach to AML regulation, leveraging data analytics to prioritise high-risk firms and sectors. 

Guidance 

Responsibility for guidance on anti-money laundering (AML)/counter terrorist financing (CTF) for professional service providers will be transferred over to the FCA.

Information and Intelligence

Under the proposal, the FCA would be under an obligation to provide up-to-date information on AML and CTF to the firms they supervise. This includes relevant information on money laundering and terrorist financing practices identified by the supervisor, HM Treasury, the Home Office or the NCA. Separately, FCA could carry out intelligence-sharing with law enforcement, other supervisors and authorities as appropriate, and support whistleblowing. The NCA would be required to share with the FCA the Suspicious Activity Reports (SARs) submitted by regulated firms. 

Enforcement

The FCA would have the same enforcement powers it already exercises in relation to the financial services firms (fines, warnings or criminal prosecutions, depending on the severity of the failure) and, in addition, it would be able to issue minor fines for more routine instances of non-compliance such as failure to register.

Appeals

Decisions made by the FCA in relation to their AML/CTF supervision of professional services firms would be appealable to the Upper Tribunal.

Funding and Fees

The FCA is funded by fees from the firms it regulates. The Treasury proposes that the costs of the FCA’s expanded supervisory duties in relation to AML are met by the law and accountancy firms to which the new regime will apply. 

Transition and Supervisory Co-Ordination

The FCA has signaled its intention to work closely with existing regulators and members bodies involved in regulation and supervision of professional services during this phase to ensure that knowledge of the various professional services sectors is retained.

Under the proposal, it is envisaged that the various existing professional members bodies and regulators will no longer have AML/CTF supervisory oversight, whilst continuing to operate their other existing functions. The Treasury acknowledges that once the FCA’s new AML role is fully operational, some firms may experience a degree of dual regulation with requirements to interact with their professional bodies for non-AML/CTF related matters and with the FCA for AML/CTF related matters. The Treasury, FCA, HMRC and the professional body supervisors plan to work together on how to limit the burden of this dual regulation.

Key Questions Asked in Consultation

The consultation raises several critical questions that will shape the future of AML supervision. Stakeholders are invited to comment on whether the proposed powers are sufficient for effective oversight and whether sector-specific supervisory teams should be established to address unique risks in law and accountancy. 

Various questions around the transition process are asked in the consultation, including how a smooth and low-burden transition may be best achieved, and how an information-sharing regime can be established between the FCA and other regulators. 

Whilst the consultation proposes amendments to information sharing and envisages that information gateways will be broad enough to encompass information sharing by the FCA in its broadened role with the relevant professional services bodies, the scope is unclear including whether this would encompass suspicious activity reports (SARS) that are received by the FCA from the NCA. We suggest that there need to be some guard-rails around the onwards transmission of information obtained by the FCA to other regulators for use in connection with purposes other than AML/CTF. 

Stakeholders have been invited to comment on the proposal that the FCA will charge fees to professional services firms for AML regulation. The FCA intends to consult on how it intends to do this in due course. 

Finally, whilst existing guidance, such as the Legal Sector Affinity Group (LSAG) for law firms and CCAB for accountants, is considered valuable, the consultation asks whether responsibility for issuing AML/CTF guidance should be transferred over to the FCA.

Impact on the Legal and Accountancy Sectors

FCA AML/CTF supervision of law and accountancy firms will mark something of a step change in AML/CTF regulation for these sectors. While the core obligations under the MLRs remain unchanged, firms should anticipate differences in supervisory style and prepare accordingly. The shift to a more assertive, risk based and data driven approach under FCA-led oversight will require consideration of the need for cultural and operational adjustments. 

Firms must be ready to provide evidence of their compliance with requirements, including written policies and procedures that are adequate for the purpose (and evidence that they have been implemented and are being applied effectively), with detailed documentation of risk assessments, client due diligence, and ongoing monitoring, given the FCA’s modus operandi of detailed systems and controls examination including through data-driven inspections. 

Practical steps for firms to consider ahead of the change to FCA supervision include reviewing their governance structures, fostering a culture of compliance across all levels of the organisation, enhancing training programmes, and investing in AML technology to support compliance.

Concerns have arisen among professional firms in response to the proposals in a number of respects including:

• the FCA’s currently limited understanding of the sector (including unique AML risks posed by certain areas of work such as conveyancing for law firms); 
• the potential for “fit and proper” assessments of officers and managers to be intrusive and overlap with existing professional regulation; 
• the potential for time-consuming and expensive “skilled person” reports;
• the potential for a significant overall increase in the cost of compliance and the time and resources needed and,
• how legal professional privilege will be handled in a different regulatory environment.

Firms that are subject to any ongoing AML/CTF investigations and enforcement actions will no doubt wish to seek clarity on whether these proceedings will be transferred to the FCA. 

Firms responding to the consultation will most likely wish to advocate for clear guidance including on transitional arrangements and funding, as well as for proportional enforcement, to avoid unnecessary disruption. 

Gaps in the Consultation

The consultation does not identify timelines for implementation of the Treasury’s proposals for transferring powers to the FCA, nor does it deal with operational issues about transfer of investigations, and strategies for retaining sector-specific expertise. 

The consultation does not tackle the potential for overlapping supervision and enforcement actions between the FCA and existing professional regulators, such as the SRA and professional accountancy bodies. 

Stakeholders have called for clearer guidance on transitional arrangements and proportionality in enforcement to avoid unnecessary disruption. 

The consultation also lacks detail on how the FCA will engage with smaller firms to ensure compliance without imposing disproportionate burdens. 

Timelines

The consultation was commenced on 9 November and runs until 24 December 2025, so firms now have very limited time to respond.

The Treasury’s transition plan is expected in 2026. It was anticipated that the proposals would be fully implemented before the global FATF performs its evaluation of the UK AML and CTF measures in August 2027. However, according to HM Treasury’s latest indications, primary legislation is required and is very unlikely to pass before late 2026. While interim work can proceed, the transfer of AML supervision to the FCA is unlikely to begin before 2028. Firms should therefore plan for a phased transition over the next 2–3 years.

Nevertheless, preparations by professional firms for FCA-style supervision can begin now. Early preparation will be critical to mitigating risks and ensuring a smooth transition. 

Comment

The FCA’s proposed takeover of AML supervision represents a significant regulatory shift for law and accountancy firms. Proactive engagement with the consultation and early adaptation to FCA expectations will be essential to maintaining compliance and mitigating risks.