FCA Cracks Down on Unregulated Lenders Over Anti-Money Laundering Failures

The Financial Conduct Authority (FCA) has imposed restrictions on six unregulated Annex 1 lenders following concerns over their anti-money laundering frameworks. For fintech professionals, this signal of enhanced oversight highlights that even firms outside the traditional regulatory perimeter face severe operational limitations if their financial crime controls fail to meet the regulator's increasingly stringent standards.

What was announced

The FCA has intervened to restrict the operations of six firms: Kingscrown Finance Ltd, MOMSB Ltd, Momentus Capital Ltd, Grosvenor Funding Ltd, Grosvenor Funding (North West) Ltd, and Abbital Ltd. These restrictions, which were imposed at the firms' own request following FCA concerns, limit their ability to take on new customers or conduct new business with existing ones, including the extension of credit.

The specific measures vary by firm. Kingscrown Finance Ltd faced initial restrictions on 21 April 2026, followed by further measures on 25 September 2026 that require an orderly wind-down of its loan book. MOMSB Ltd and Momentus Capital Ltd were restricted on 7 October 2026, while Grosvenor Funding Ltd and Grosvenor Funding (North West) Ltd faced similar actions on 9 October 2026. These four firms are prohibited from entering new lending arrangements and must undergo an independent review of their anti-money laundering (AML) frameworks. Abbital Ltd, restricted on 15 October 2026, is subject to specific conditions for new business and must also conduct an independent review of its AML systems.

This action is part of a broader crackdown on Annex 1 firms—entities that operate in sectors with a heightened risk of money laundering. While these firms must register with the FCA for AML supervision, they are not authorized or subject to wider conduct regulation. The FCA is currently assessing responses from approximately 900 registered Annex 1 firms to identify further financial crime risks.

"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."

Steve Smart, executive director lead for fighting financial crime at the FCA

The companies involved

The Financial Conduct Authority (FCA) is the primary conduct regulator for financial services firms and financial markets in the UK. While it oversees thousands of authorized firms, it also maintains a supervisory role over "Annex 1" firms under Money Laundering Regulations. These entities, which include the six lenders targeted in this latest action, operate in sectors identified as having a heightened risk for financial crime but are not subject to the full suite of FCA conduct regulation.

Among the firms facing restrictions is Momentus Capital, which operates via momentuscap.org. The other entities—Kingscrown Finance Ltd, MOMSB Ltd, Abbital Ltd, and the Grosvenor Funding group (comprising Grosvenor Funding Ltd and Grosvenor Funding (North West) Ltd)—are unregulated lenders that were required to register with the regulator specifically for anti-money laundering oversight. These firms now face significant operational hurdles as they are forced to reconcile their internal controls with the regulator's expectations or face a total cessation of new business.

What FF News has reported before

The FCA has maintained a high tempo of enforcement and policy updates throughout late 2026. FF News recently covered the FCA Outlines Vision for 'Agentic' Finance and Responsible AI Adoption in UK Services, highlighting the regulator's focus on emerging technologies. In terms of direct enforcement, the authority recently collaborated with the NCA to strike a major blow to an organised insider dealing ring. The regulator is also managing significant legacy issues, such as the FCA Motor Finance Compensation Scheme Legal Challenge. Furthermore, the high bar for compliance mentioned in this latest action mirrors the "high bar" noted when the FCA opened its crypto authorisation gateway earlier this month.

What this means

This move signals a transition from the FCA’s theoretical warnings to tangible intervention within the unregulated lending space. By imposing "voluntary" restrictions that effectively freeze new business and mandate independent audits, the regulator is placing the burden of proof entirely on the firms to justify their continued registration. This creates immediate pressure on the wider fintech ecosystem; regulated banks and payment providers must now treat Annex 1 registration as a starting point for due diligence rather than a seal of approval. The ongoing assessment of 900 other firms suggests this is not an isolated crackdown but the beginning of a systemic "clean-up" of the UK’s fringe lending market.