UK Unveils Overhauled AML/CTF Supervisory Framework in Latest Treasury Report

In its latest Anti-Money Laundering and Counter-Terrorist Financing Supervision Report for 2024–25, HM Treasury delivers an expansive evaluation of the UK’s financial defenses against illicit activity, covering the work of 25 supervisory bodies and detailing wide-reaching structural reforms.

The document highlights the government’s intention to overhaul the existing supervisory landscape by assigning the Financial Conduct Authority sole responsibility for overseeing professional services firms, a shift driven by a 2022 review that exposed persistent shortcomings in the fragmented supervisory system. According to the report, the transition—once supported by the required legislation, funding commitments, and a comprehensive handover plan—will see the Financial Conduct Authority take on oversight of Legal Service Providers, Accountancy Service Providers, and Trust and Company Service Providers, effectively absorbing the firms currently under the remit of Professional Body Supervisors as well as those supervised by His Majesty’s Revenue and Customs. Treasury officials express gratitude for the work of the Professional Body Supervisors and the Office for Professional Body Anti-Money Laundering Supervision, noting that the latter’s function will become redundant once supervisory duties under the Money Laundering Regulations are fully centralised. In the interim, the government stresses that robust supervisory performance will continue as it monitors the system’s overall effectiveness.

The report underscores the gatekeeping responsibilities of supervisors, emphasizing that businesses subject to the Money Laundering Regulations must be vetted rigorously to ensure they meet the threshold standards required to prevent the misuse of the financial system. This vetting includes confirming that individuals in positions of significant influence possess the requisite integrity and competence and have not been convicted of serious financial or organized crime offenses. Across all supervisors, 12,908 applications for AML/CTF supervision were received in the 2024–25 period, with 925 rejected—closely mirroring refusal numbers from the previous year. The total supervised population remained steady at 94,891 businesses. Supervisors continued to apply a risk-based model to allocate resources, with 9% of supervised entities deemed high-risk, 35% medium-risk, and 56% low-risk. His Majesty’s Revenue and Customs, one of the country’s largest supervisors, reported receiving 9,524 applications and rejecting 485, identifying Money Service Businesses, Trust and Company Service Providers, and Art Market Participants as the most inherently vulnerable sectors within its remit. The Financial Conduct Authority, overseeing roughly 16,000 firms, recorded 275 applications and 85 refusals.

Reflecting efforts to sharpen the assessment of the regime’s overall effectiveness, the government introduced several new reporting metrics aligned with the Financial Action Task Force’s methodology. Supervisors have now broken down onsite visits and desk-based reviews by the risk category of the business and reported the proportion of firms found non-compliant at their most recent evaluation, as well as the number of businesses whose risk ratings were escalated to high following a review. For the first time, supervisors also disclosed new data on Suspicious Activity Reports, including the number of entities asked to provide their reports and how many were reviewed for quality. The system’s operational intensity was supported by a significant increase in financial resources: total AML/CTF expenditure rose sharply to £57 million, up from £46 million in the preceding year, funding 693 full-time equivalent staff dedicated exclusively to this work. Desk-based reviews and onsite inspections collectively touched 8% of the entire supervised population. His Majesty’s Revenue and Customs alone conducted 451 desk-based assessments and 793 onsite visits, including 45 intelligence-driven operations targeting Money Service Businesses during coordinated “days of action.”

The government presents these developments within the broader context of the UK’s strategic approach to illicit finance, which is anchored in the Economic Crime Plan 2023–26 and the newly released Anti-Corruption Strategy. Both frameworks are designed to disrupt criminals’ ability to profit from illicit wealth, address structural weaknesses within the domestic system, and reinforce the nation’s defenses internationally. The Treasury confirms that further refinements to the Money Laundering Regulations are in progress to clarify existing provisions, close loopholes, strengthen information-sharing channels, and ensure customer due diligence requirements are applied with greater risk-sensitivity. These measures form part of the UK’s preparations for the Financial Action Task Force’s fifth round of evaluations, culminating in a Mutual Evaluation Report slated for release in 2028. Under the revised methodology, effectiveness assessments of financial and non-financial supervision will be considered separately, offering more precise guidance for reform. Coupled with ongoing updates to the National Risk Assessment of Money Laundering and Terrorist Financing, including the latest edition published in July 2025, the government maintains that these efforts position the UK to remain agile, resilient, and internationally trusted in the fight against financial crime.

By fLEXI tEAM