Corruption, deceit, and illicit financing activities | Overview of the Regulatory Landscape in the UK, July 2025
The UK Money Laundering Regulations have undergone significant updates, aiming to bolster anti-money laundering (AML) measures and keep illicit finance out of the UK economy. These reforms stem from the UK’s fourth National Risk Assessment (NRA) on money laundering and terrorist financing published in 2025.
One of the main changes involves updates to high-risk third countries. The UK Government is introducing targeted enhanced due diligence (EDD) requirements for transactions or customer relationships involving persons established in Financial Action Task Force (FATF) Call for Action (blacklist) countries, rather than applying it to those on the FATF Increased Monitoring (grey) list. This narrows the scope of automatic EDD to focus on the highest-risk jurisdictions.
Enhanced due diligence updates also form part of the changes. EDD will now be specifically required for "unusually complex" transactions instead of all complex transactions, indicating a more risk-focused approach to suspicious transactions. Additional new customer due diligence measures will apply to pooled client accounts and some non-financial firms, clarifying and tightening earlier requirements for these higher-risk scenarios.
Other notable changes include the closure of a key loophole involving the registration of trusts that own UK land or property with the Trust Registration Service, aiming to improve transparency and prevent misuse of trusts in illicit finance. The regulations also improve information sharing between supervisors and include better onboarding requirements in bank insolvency scenarios.
The money laundering regulations have been revised to update rules around crypto asset service providers and the sale of ready-made companies to strengthen controls in these high-risk areas.
While specific detailed FCA guidance on Politically Exposed Persons (PEPs) was not provided in the given search results, the overall approach in the 2025 updates includes enhanced due diligence aligned with national risk assessments, requiring firms to take consistent, risk-based approaches for PEPs under AML rules. This is part of the broader Government and FCA commitment to close loopholes and respond to emerging risks effectively.
The updated HM Treasury advisory notice on high-risk third countries is available for viewing, and the Regulatory Outlook series, published by our firm name, provides high-level summaries of important forthcoming regulatory developments in various sectors, including bribery, fraud, and anti-money laundering.
Preparations should be well underway for businesses to ensure they have reasonable procedures in place to prevent fraud, as the new Failure to prevent fraud offence is set to come into force on 1 September 2025. The government intends to publish the draft statutory instrument in the coming months for technical feedback, before laying it in Parliament later this year if parliamentary time allows.
Businesses are encouraged to stay informed about these developments and adjust their AML procedures accordingly to maintain compliance and protect against illicit activities. For more detailed information on the FCA’s guidance on PEPs, additional resources can be found in official FCA communications.
- In light of the updated UK Money Laundering Regulations, wealth-management firms must implement enhanced due diligence for "unusually complex" transactions from jurisdictions on the Financial Action Task Force (FATF) Call for Action (blacklist), as part of a more risk-focused approach.
- To maintain compliance and protect against illicit activities, personal-finance businesses must stay informed about forthcoming regulatory developments, particularly those involving Politically Exposed Persons (PEPs), as the government prepares to publish detailed guidance on this matter.
