The integrity and resilience of the UK’s financial system are fundamental to our country’s prosperity and security. A strong financial system supports jobs, businesses and families up and down the country, and helps to make Britain a safer and more prosperous place to live and work. However, the same openness that makes the UK attractive for trade and investment can be exploited by criminals and terrorists who try to move and hide their illicit money through our financial system. These activities are not victimless crimes; they fund serious criminal activity, undermine trust in our economy, and threaten the safety and wellbeing of our communities.
Today the Government are publishing two key documents that lay out our approach to identifying and managing these risks to UK citizens and their interests. The UK’s fourth national risk assessment of money laundering and terrorist financing, published jointly between His Majesty’s Treasury and the Home Office[1] and HM Treasury’s response to the consultation on improving the effectiveness of the money laundering regulations[2] together represent a robust, risk-based approach where regulation is underpinned by a comprehensive assessment of current and emerging threats. Our aim is clear: to keep criminals’ money out of our economy, strengthen the defences of our financial system, and ensure the UK remains a secure and attractive place to do business.
The NRA takes account of the latest developments and information since the previous publication in 2020. The report has been laid before Parliament.
The key findings from this assessment are as follows:
The UK continues to be exposed to a high level of money laundering risk. Since 2020, the wider context has shifted due to increasing global insecurity, which has altered the risk landscape and the methodologies used by criminals
Money laundering increasingly overlaps with kleptocracy and sanctions evasion, as sanctioned actors use established laundering networks to hide funds.
The increasing adoption of new technologies are enabling novel methods for laundering and terrorist financing.
Cash-based money laundering remains a significant threat, including cash smuggling, use of cash-intensive businesses, money mules and misuse of legitimate channels including post offices to introduce criminal proceeds into the financial system.
Terrorist financing in the UK typically involves small sums for basic needs or overseas transfers, using both illicit and legitimate routes.
The NRA highlights both a strengthening of the UK’s defences and the evolving nature of the risks we face. Since the previous assessment, significant steps, including under the economic crime plan 2023-26, have enhanced the UK’s response. These steps, including expansion of public-private partnership working and legislative reforms, support the UK’s alignment with international standards, including those set by the Financial Action Task Force.
The findings of the NRA will directly inform policy, regulation and operational priorities for Government, law enforcement, supervisors and regulated businesses. By equipping these partners with up-to-date risk intelligence, we are ensuring that everyone involved can respond proportionately to the threats we face, protecting the UK’s reputation and making it a safer place to live, work and invest.
Alongside the NRA, the Government are publishing their response to a recent consultation on the money laundering regulations, which attracted over 200 responses from industry, law enforcement, supervisors and civil society. The Government will introduce targeted changes to the MLRs reflecting an evidence-led, risk-based approach, ensuring that regulation is focused on the highest risk activities and threats to the UK system, while closing loopholes such as those related to the registration of certain trusts.
The amendments include changes to requirements for enhanced due diligence for complex transactions and high-risk countries; clearer customer due diligence requirements for pooled client accounts and non-financial firms; closing a key loophole on registration of trusts owning UK land or property on the trust registration service; improved onboarding in bank insolvency scenarios; better information sharing between supervisors; and updated rules for crypto asset service providers and the sale of “off-the-shelf” companies. Other issues will be addressed through guidance, working closely with supervisors to ensure that regulated firms are taking a consistent and risk-based approach.
These reforms, together with the updated NRA, will further strengthen the UK’s defences against illicit finance, while supporting responsible businesses and protecting people’s savings and livelihoods. We remain committed to ongoing engagement with stakeholders and will keep the MLRs under review to respond to emerging risks.
These publications mark an important milestone in our plan for change, supporting economic growth while ensuring that our financial system works for people and businesses, and denies criminals and terrorists the resources they need to do harm.
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