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Welcome to AboutAML Regulation breakdown for the week
In case you don’t know, sometimes regulation adds obligations, and sometimes it removes them
You really never know until you read through
On 3 August 2026, the UK’s Financial Conduct Authority (FCA) finalised reforms expected to save firms £108 million a year by simplifying the transaction-reporting regime.
Before we look at the changes, there is an important distinction to make. Two different compliance activities are often confused because both involve reporting transactions.
Suspicious activity reporting versus transaction reporting
Suspicious activity reporting: When a firm knows or suspects that activity may involve money laundering or terrorist financing, it may need to submit a suspicious activity report (SAR) to the relevant financial intelligence unit. In the UK, that is the UK Financial Intelligence Unit within the National Crime Agency.
Transaction reporting is a market-oversight requirement: Investment firms and certain other market participants submit prescribed details of reportable trades to the FCA. The reports are not filed because the transactions are suspicious. The FCA uses the data to monitor markets, supervise firms and detect possible market abuse, such as insider dealing or manipulation.
This month’s reform concerns the second type. It does not change AML suspicious activity reporting.
In case you are wondering,
we are referring specifically to UK terminology here. The UK commonly uses Suspicious Activity Report (SAR), while EU commonly uses Suspicious Transaction Report (STR). Terminology varies across jurisdictions. In this article, however, “transaction reporting” refers only to the UK market-oversight requirement not to an AML suspicious transaction report.
So, don’t be confused!
Now what is changing?
The FCA’s final rules include four changes:
Fewer reporting fields: The number of fields in a transaction report will fall from 65 to 52.
A narrower range of instruments: Reporting obligations will be removed for around 7 million financial instruments that are tradeable only on EU venues. The FCA estimates this change alone will save firms approximately £32 million a year.
FX derivatives removed from scope: Foreign-exchange derivatives will no longer be reportable under this regime, reducing costs for more than 400 UK firms.
A shorter back-reporting period: The default period for correcting historical reporting errors will be reduced from 5 to 3 years. The FCA expects this to reduce the reports that need to be resubmitted by about one-third. It may still require five years of back reports in exceptional cases, and existing five-year record-keeping duties remain.
The new regime takes effect on 3 April 2028. However, the FCA began applying supervisory flexibility in specified areas on 3 August 2026 so that eligible firms can benefit earlier.
That flexibility is not a blanket permission to stop reporting everything that will eventually be removed.
For example, firms may stop reporting FX derivatives during the implementation period only where they report the same transactions under UK EMIR (The Markets in Financial Instruments Regulation). Firms that do not submit the relevant UK EMIR data must continue meeting the applicable transaction-reporting requirements.
Why does this matter?
If you are just learning about AML, a Complinace professional, or busniesses navigating AML obligations…
First, the FCA still regards transaction reports as important. It is removing duplicative or low-value requirements while trying to protect data quality and market oversight.
The same principle applies in AML. A monitoring system that generates too many low-quality alerts can bury genuinely suspicious activity. Collecting more information is useful only when the information serves a clear risk or supervisory purpose.
Second,
a SAR, triggered by knowledge or suspicion of possible financial crime; and
a transaction report, required for qualifying trades under a market-reporting regime whether or not anything appears suspicious.
What affected firms may look into?
FIRMS: Investment firms, Operators of trading venues, Approved reporting mechanisms (ARMs), and Other market participants involved in submitting transaction reports, instrument reference data and order book data may;
review their reporting logic and identify which transactions will remain reportable;
map the revised fields and scope against current systems and controls;
confirm whether they qualify for each part of the FCA’s supervisory flexibility;
assess data governance, ownership, accuracy and lineage across internal systems and reporting vendors; and
prepare for the draft schema, validation rules and guidance expected in October 2026.
Official sources
FCA: Finalised rules to cut transaction-reporting costs by over £100 million a year
FCA Policy Statement PS26/15: Improving the UK transaction reporting regime
If you found this useful, feel free to share it with a colleague who works in compliance, risk, fraud, or financial crime to stay informed between meetings or over a cup of coffee.
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Tosin
AboutAML