In a joint publication, the Home Office and HM Treasury recently released the United Kingdom’s fourth “ National Risk Assessment (NRA) of Money Laundering and Terrorist Financing,” laying out how the money laundering and terrorist financing (ML/TF) risk landscape has evolved since the last NRA update in 2020. It also serves as a framework as to where companies may want to refocus their ML/TF risk assessment efforts.
Transparency International UK welcomed publication of the national risk assessment. “As those involved in criminality and corruption continually seek new ways to circumvent rules, it is vital that law enforcement, regulators and the private sector – our first line of defense – use these insights to inform a robust, risk-based response,” TI UK Advocacy Director Rachel Davies stated in a press release.
Key findings
One key finding from the NRA, published July 17, 2025, puts a spotlight on the following three sectors whose ML risk ratings have increased since the 2020 National Risk Assessment:
Financial technology (Fintech) firms: The 2025 National Risk Assessment increased the ML risk rating for fintech firms from medium to high, noting that organized crime groups are increasingly targeting electronic money institutions (EMIs) and payment service providers (PSPs) to launder criminal funds. The NRA notes that outsourcing AML compliance functions to third-party providers, in particular, creates risk vulnerabilities. Thus, it’s important when using a third-party provider that the provider understands the specific money laundering risks of the EMI or PSP to appropriately calibrate internal controls to prevent abuse by criminals, the NRA states.
Cryptoasset service providers: Cryptoasset service providers is another sector whose risk rating was increased from medium to high since the last assessment. According to the National Risk Assessment, cryptoassets have “increased significantly” since 2020 and are used for laundering all forms of crime proceeds. Increasing levels of cryptoassets have been obtained through illicit means, “such as cybercrime, ransomware, and cryptoasset thefts, which are then laundered,” the NRA states.
Casinos: ML risk in the casino sector was increased from low to medium, due to changes in customer base, transaction risks posed by remote casino platforms, and money-service businesses (MSBs) offered by some casinos, which attract high-risk customers. According to the National Risk Assessment, “common occurrences of money laundering through licensed casinos are in the form of recreational spending of criminal property.” Criminals’ use of illegal casinos to launder criminal funds and the use of “money mule accounts established to transfer criminal funds into the retail banking system also remains a risk.”
Other sectors whose ML risks remain at a high level – unchanged from the 2020 National Risk Assessment – are retail banking, wholesale banking and markets, wealth management, legal service providers, accountancy firms, and trust and company service providers (TCSPs).
The three sectors that face the highest risk of terrorist financing are retail banking, EMI/PSPs, and MSBs. “Terrorist financing risk in the UK typically involves small sums for basic needs or overseas transfers, using both illicit and legitimate routes,” Reynolds stated.
Another key finding from the NRA revealed “increased convergence between money laundering with kleptocracy and sanctions evasion” since Russia’s invasion of Ukraine. “As of April 2025, UK financial sanctions covered over 3,600 individuals and 990 entities across 35 sanctions regimes, a large proportion relating specifically to the Russia regime,” the NRA stated.
A separate analysis, published by TI UK in May, found over 170 UK properties, collectively worth 2.5 billion GBP, were bought with illicit funds through complex trust arrangements, with 138 of those properties, valued at over £2.1 billion, bought in the last 15 years. “These properties have ties to sanctioned individuals, politically exposed persons (PEPs) from high-corruption-risk countries, and individuals charged or accused of corruption-related charges or allegations,” according to TI UK’s analysis.
HM Treasury’s consultation response
The NRA was published alongside HM Treasury’s consultation response on improving the effectiveness of ML regulations, following a consultation it ran last year. The consultation, which took place between March-June 2024, addressed four main areas:
- Making customer due diligence more proportionate and effective
- Strengthening coordination on economic crime
- Providing clarity on scope of the ML regulations
- Reforming registration requirements for the Trust Registration Service (TRS)
In total, the consultation garnered 224 responses from industry, law enforcement agencies, supervisors, and civil society. HM Treasury’s consultation response, published in July, sets out the government’s next steps for how it intends to amend the money laundering regulations, which will include, in part:
Requiring enhanced due diligence on “unusually complex” transactions, instead of all complex transactions
Requiring enhanced due diligence only where relevant transactions or customer relationships “involve a person established in a ‘Call for Action’ country, not an ‘Increased Monitoring List’ country”
Allowing financial institutions to offer pooled client accounts under a wider set of circumstances than currently permitted under the simplified due diligence rules
Introducing a de minimis exemption for certain trusts currently required to register on the TRS
Providing for “relevant carve-outs from customer due diligence requirements to assist the customers of an insolvent bank to access new accounts rapidly and transact from them”
Including the sale of off-the-shelf companies within the scope of regulated TCSP activity to ensure that customer due diligence is carried out across the full range of TCSP services
The consultation response also addresses registration and change-in-control for cryptoasset service providers. Through upcoming legislative reforms, the UK Financial Services and Markets Act (FSMA) will be extended to parts of the cryptoasset market. Such firms will be subject to “fit and proper checks” before FCA authorization under FSMA, HM Treasury stated.
The upcoming regulatory regime will ensure firms authorized for new cryptoasset activities will not be required to additionally register as “cryptoasset exchange providers” or “custodian wallet providers” under ML regulations. They’ll only need to seek authorization under FSMA with the FCA, the consultation response states.
HM Treasury said it also will amend the registration and change-in-control thresholds to align with FSMA thresholds, ensuring “appropriate consistency” across the cryptoasset sector and ensuring that cryptoasset firm owners with complex ownership structures go through fit and proper checks as well.
HM Treasury additionally ran a cost-of-compliance survey, which garnered 136 responses. In the consultation response, it stated, “The survey will help us to understand better how regulated businesses comply with the regulations in practice and to assess the impact of future changes to the money laundering [regulations].”
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