Regulator says registration is no substitute for due diligence
Unregulated lenders active in bridging and buy-to-let finance are among six firms restricted by the FCA over anti-money laundering (AML) concerns. The regulator has also reminded regulated firms dealing with such lenders that FCA registration does not replace their own checks.
The restrictions, imposed at each firm’s request, limit the lenders’ ability to take on new customers or do new business with existing customers, including extending existing credit. The FCA raised concerns about their AML policies, controls and procedures while assessing their applications.
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Property lenders in scope
Kingscrown Finance Ltd, which provides business and investment lending including buy-to-let and HMO finance, has been under voluntary restrictions since April 21, 2026. The FCA said at the time it had never been authorised or registered.
Further restrictions on September 25, 2026, limit how Kingscrown may receive payments from existing customers and require an orderly wind-down of its existing loan book.
Grosvenor Funding Ltd and Grosvenor Funding (North West) Ltd were restricted on October 9 from taking on new customers or entering into new lending arrangements, with limits on existing customer payments and an independent review of their AML framework.
Grosvenor Funding has previously completed broker-introduced bridging loans, including on buy-to-let properties.
MOMSB Ltd and Momentus Capital Ltd came under similar restrictions on October 7, with the bar on new business subject to limited exceptions. Abbital Ltd followed on October 15, with restrictions specifying the circumstances for new customers, new lending and existing customer payments, plus an independent review of its AML systems and controls.
Registration is not authorisation
Annex 1 firms operate in sectors that can present a heightened risk of money laundering and other financial crime. They register with the FCA for supervision under the Money Laundering Regulations but are not authorised or subject to wider FCA regulation.
The FCA has said customers of Annex 1 firms cannot use the Financial Ombudsman Service. It has also said it is aware of cases where consumers were encouraged to set up limited companies to access unregulated bridging finance from these firms.
Market Financial Solutions (MFS) was registered under the same regime before entering administration in February, and the FCA opened an enforcement investigation into the lender in March.
Due diligence falls on regulated firms
When dealing with Annex 1 firms, regulated firms must carry out due diligence to understand the firm’s business in line with legislative requirements. This includes seeking direct confirmation of registration status, independently checking information provided, and understanding and managing any risks.
The FCA said registration under the Money Laundering Regulations is not a substitute for that due diligence. The reminder applies to any regulated firm dealing with Annex 1 businesses, which can include intermediaries introducing cases.
Barclays chief executive CS Venkatakrishnan has said the bank will no longer extend credit to structured finance counterparties unable to demonstrate robust financial controls, after a £228 million charge linked to the collapse of MFS.
The restrictions land in a market where bridging lending reportedly exceeded £13 billion in 2025.
900 firms under review
In August, the FCA said Annex 1 registration applications would face closer scrutiny and take longer. Firms must show they understand their financial crime risks and have effective systems and controls to manage them, or face action.
As part of its enhanced oversight, the FCA is 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.
Steve Smart, executive director lead for fighting financial crime at the FCA, said Annex 1 firms had been warned they face increased scrutiny.
“They must demonstrate they can manage the money laundering risks they face,” he said.
“Where they cannot satisfy us, we will intervene,” Smart added. Fighting financial crime is one of the FCA’s strategic priorities.
