In July 2025, HM Treasury published its formal response to the consultation held between March and June 2024 on reforms to the UK’s Money Laundering Regulations (MLRs). The consultation aimed to strengthen the effectiveness and proportionality of the UK’s anti-money laundering and counter-terrorist financing (AML/CTF) regime. It received 224 responses from a broad cross-section of stakeholders, including regulated businesses, supervisors, law enforcement bodies and civil society groups.

ACCA asked for members’ feedback on this consultation in April 2024 and thanks those members who responded with comments as it helps shape ACCA’s response to consultations on behalf of members.

The government's response sets out a number of targeted legislative changes and non-legislative actions, intended to enhance system-wide coordination, clarify regulatory obligations, and make compliance more risk-based and effective.

Focus areas of reform

• making customer due diligence more proportionate and effective
• strengthening system coordination on economic crime
• providing clarity on the scope of the MLRs
• reforming registration requirements for the Trust Registration Service.

Making customer due diligence more effective

Most respondents agreed that the current triggers for due diligence are generally clear, but some uncertainty remains around the definition of a ‘business relationship’, particularly in non-financial sectors. Rather than changing the law, the government plans to clarify expectations through improved sector-specific guidance.

In response to differing views on source of funds checks during ongoing monitoring, the government has opted to retain the current regulatory language, while committing to produce more practical guidance and training tools to support firms in interpreting and applying the rules.

There was broad support for clearer guidance on digital identity verification. HM Treasury will work with the Department for Science, Innovation and Technology to publish updated guidance reflecting the role of digital tools under the UK’s new Data (Use and Access) Act 2025.

The rules on enhanced due diligence (EDD) will be made more targeted. Only ‘unusually complex’ transactions will require EDD, as opposed to all complex transactions. Furthermore, mandatory EDD will apply only to dealings involving countries listed by the Financial Action Task Force (FATF) under its ‘call for action’, rather than those under ‘increased monitoring’. These changes aim to ensure that firms focus their efforts where the risks are highest.

The current link between pooled client accounts (PCAs) and simplified due diligence will be removed. This will allow for wider and more proportionate use of PCAs while maintaining appropriate risk controls.

Strengthening system coordination on economic crime

The government has committed to strengthening the supervisory framework by improving how information is shared between public bodies. The Financial Conduct Authority’s ability to share confidential information will be extended, including to cover crypto-asset firms. The Financial Regulators Complaints Commissioner will also be brought within the scope of information-sharing powers under the MLRs.

Companies House will have a clearer role under the regulations. The Registrar of Companies and the Secretary of State will be formally included in the MLRs, supporting better collaboration and improving the integrity of corporate data. Although there will be no statutory requirement for firms to use the National Risk Assessment (NRA), the government will encourage wider use of NRA guidance and case studies to support effective risk assessments.

Clarifying scope and registration requirements

To improve clarity and simplify compliance, the government will convert euro-denominated monetary thresholds in the MLRs into pounds sterling on a one-to-one basis. This change will apply unless it would result in a significant divergence from international standards.

The sale of ‘off-the-shelf’ companies by trust and company service providers (TCSPs) will be brought within the scope of the MLRs. This measure aims to close a gap previously exploited for illicit financial activity. For crypto-asset service providers, reforms will streamline the dual registration process under both the MLRs and the Financial Services and Markets Act (FSMA), aligning change-in-control provisions and reducing duplication.

Reforms to the Trust Registration Service

Changes to the TRS are intended to ensure that beneficial ownership transparency keeps pace with evolving risks, without placing unnecessary obligations on low-risk trusts.

Non-UK express trusts that acquired land or property in the UK before 6 October 2020 will be required to register with the TRS, but only if they still hold that interest when the new rules come into force. Information on these trusts will be accessible to third parties who can demonstrate a legitimate interest.

Certain trusts arising on death, including co-ownership arrangements and those created during the administration of estates, will be exempt from registration for two years. Scottish survivorship destination trusts will be excluded from registration altogether, reflecting their low risk and bringing them in line with similar arrangements in England and Wales.

A new de minimis exemption will be introduced for non-taxable trusts with assets under £5,000 and distributions of less than £2,000 per year. These low-value arrangements will not be required to register under the TRS, unless they otherwise fall within scope for tax reasons.

Conclusion

The consultation highlighted the ongoing need for clearer and more practical guidance, including sector-specific examples to help firms apply the rules in context. The government has committed to working closely with supervisory bodies and industry stakeholders to update guidance materials accordingly.

Draft statutory instruments to implement these reforms are expected to be published later this year for technical consultation. If parliamentary time permits, the final regulations will be laid before the end of the year.

These changes mark a significant step in the evolution of the UK’s AML regime. By focusing on higher-risk activity, improving regulatory clarity and reducing unnecessary obligations, HM Treasury aims to deliver a more effective, proportionate and intelligence-led framework that protects the UK economy while supporting legitimate business.

Practitioners within the AML supervision regime should take note and should use all the resources available on our AML hub, including risk assessment, reporting obligations and sanctions guidance.

We will ask for further comments on the draft legislation once this is published but if you have any comments in the interim, please do send these in to UKPolicy@accaglobal.com.