The UK is undergoing a comprehensive anti-money laundering (AML) reform in 2025, marking a significant public recalibration of risk management and regulatory responsibility across sectors. This reform represents a strategic shift from static, checkbox-driven compliance toward a dynamic, risk-led regime that demands smarter, sector-specific engagement with financial crime risks. It is shaped by the 2025 National Risk Assessment, HM Treasury’s legislative amendments to the Money Laundering Regulations (MLRs), and a major overhaul of AML supervision in professional services.
Strategic Shift in UK AML Framework
The 2025 reforms signal a move beyond mere regulatory housekeeping. They focus on updating and aligning the UK’s AML regime to reflect evolving financial crime methods. Criminals increasingly exploit anonymity-enhancing technologies like privacy coins, decentralized exchanges, and opaque corporate structures to obscure beneficial ownership and launder illicit funds. The reforms urge firms to upgrade their policies, perform gap analyses, and train staff on emerging typologies in anticipation of the finalized regulations in early 2026.
The UK’s 2025 National Risk Assessment (NRA) underscores that the UK continues to be a high-risk jurisdiction for money laundering due to its status as a global financial hub and an open economy. The predominant sources of illicit finance have shifted, with cyber-enabled fraud surpassing drug trafficking as the most significant criminal funding source. Increased sanctions evasion, particularly related to Russia, is a persistent threat. Criminal networks leverage legal, corporate, and real estate sectors to obscure illicit funds. The NRA also highlights the central role of technology—with cryptoassets, artificial intelligence, and instant payment systems facilitating faster, more anonymous money flows while regulators expect firms to harness these technologies for enhanced detection.
Major Amendments to Money Laundering Regulations
The proposed 2025 amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 bring operational clarifications and tighten loopholes to increase regulatory responsiveness. Key changes include:
- Customer Due Diligence (CDD) Clarity: Letting agents and art market participants will follow the same CDD rules as high-value dealers, with clear timing triggers on when CDD must be applied.
- Post-Account-Opening ID Verification: Banks may verify customer identity after account opening but only under specific insolvency scenarios and with safeguards.
- Enhanced Due Diligence (EDD): EDD obligations will focus solely on jurisdictions flagged by the Financial Action Task Force (FATF) as “call for action” countries, enabling prioritization of high-risk areas.
- Complex or Large Transactions: EDD will only apply to transactions that are unusually complex or large relative to sector norms, freeing firms from unnecessary burdens.
- Pooled Client Accounts (PCAs): The automatic simplifications previously applied to PCAs are removed; banks must conduct risk assessments of each PCA’s purpose, and PCA holders must disclose the underlying clients when requested.
- Currency Thresholds: Euro-denominated thresholds are converted to sterling to simplify compliance in a post-Brexit environment.
- Off-the-Shelf Company Sales: Trust and company service providers will now face full AML obligations when selling ready-made companies, sealing a historic regulatory gap.
- Information Sharing Enhancements: Companies House is incorporated into the duty-to-cooperate framework, and the FCA’s powers to share information in crypto supervision are expanded.
These amendments aim to sharpen focus on real risks while reducing unnecessary regulatory burdens, thereby striking a balance between effective supervision and operational efficiency.
Concentration of AML Supervision with the FCA
One of the landmark changes in 2025 is the centralization of AML and counter-terrorism financing (CTF) supervision for professional services under the Financial Conduct Authority (FCA). Previously, a fragmented system had 23 different supervisors overseeing various professional bodies, including the Solicitors Regulation Authority (SRA) and the Institute of Chartered Accountants in England and Wales (ICAEW).
HM Treasury announced that starting late 2025, the FCA will assume sole responsibility for supervising law firms, accountants, trust and company service providers, and other professional services firms. The government’s rationale includes reducing inconsistencies in supervision and enforcement, facilitating better data collection, enhancing cooperation with law enforcement, and aligning UK supervision with Financial Action Task Force (FATF) standards.
Approximately 60,000 professional services firms affected by this change will now face a unified supervisory framework expected to bolster the UK’s defenses against financial crime and improve regulatory outcomes.
Emphasis on Risk-Led, Sector-Specific Compliance
The 2025 reforms clearly reject “checkbox” compliance in favor of intelligent risk engagement tailored to specific industry threats. AML compliance officers are expected to demonstrate an understanding of the unique threats and vulnerabilities their sectors face and to use technology and data-driven techniques to respond proactively. This approach aligns with the UK’s broader Economic Crime Plan (2023-2026), aiming to direct resources effectively and raise the overall quality of compliance across sectors.
For example, sectors such as cryptoasset providers, legal professionals, estate agents, and trust service providers remain under high scrutiny due to their high exposure to complex money laundering risks. The reforms encourage these industries to implement more sophisticated monitoring systems and targeted due diligence, backed by enhanced regulatory cooperation and enforcement.
Supporting Measures and International Alignment
The UK government ensures alignment with international standards through ongoing FATF cooperation. The 2025 reforms reflect FATF recommendations, including targeted enhanced due diligence and focused supervision of jurisdictions with strategic deficiencies.
Additional supporting measures include the transformation of Companies House to improve beneficial ownership transparency and updates to sanctions frameworks. Together, these reinforce the UK’s multi-layered approach to tackling complex economic and financial crime threats.
Outlook and Industry Preparedness
The AML reform landscape in the UK for 2025 sets a clear trajectory for the near future. With the final statutory instrument expected in early 2026, regulated firms across sectors are advised to begin comprehensive preparedness measures immediately. These include:
- Reviewing and revising AML policies and procedures
- Conducting risk assessments informed by the 2025 NRA
- Closing identified gaps in compliance programs
- Increasing staff training focused on new money laundering typologies and risks
- Upgrading technological capabilities for transaction monitoring and client due diligence
Regulatory agencies also signal an increased focus on enforcement and accountability, emphasizing that firms must show active, intelligent engagement with AML risks rather than passive adherence to static rules.