The UK government has introduced a series of reforms to the Money Laundering Regulations (“MLRs”) as part of its broader Economic Crime Plan 2023–2026. These changes are designed to strengthen the UK’s Anti-Money Laundering (AML) framework, improve transparency, and enhance the effectiveness of supervision. For Accountancy Service Providers (“ASPs”) and Trust or Company Service Providers (“TCSPs”) supervised by HMRC, these reforms carry significant operational and compliance implications.
Key Take Aways and Major Changes
- Tighter Customer and Enhanced Due Diligence
One of the most notable changes is the clarification and tightening of Customer Due Diligence (“CDD”) and Enhanced Due Diligence (“EDD”) requirements:
- Firms are now expected to apply more rigorous checks when dealing with clients from high-risk jurisdictions, particularly those listed by the Financial Action Task Force (“FATF”).
- The use of pooled client accounts has also come under scrutiny, with revised rules aimed at balancing accessibility with robust AML safeguards.
- ASPs and TCSPs must ensure that staff are adequately trained to identify and escalate suspicious or high-risk transactions, especially in complex or cross-border scenarios.
- Trust Registration and Transparency
Moreover, the reforms also address trust registration and transparency:
- Non-UK trusts that hold UK property, even if acquired before 6 October 2020, are now required to register with HMRC’s Trust Registration Service (“TRS”).
- A new de-minimis exemption has been introduced to simplify compliance for certain types of trusts, but ASPs and TCSPs involved in estate planning or private client services must be vigilant in ensuring that their clients meet these obligations.
- This includes conducting thorough due diligence and assisting clients with TRS registration where necessary.
- Enhanced Supervisory Powers
Regulatory supervision will become more rigorous:
- The Office for Professional Body Anti-Money Laundering Supervision (“OPBAS”) will see its powers strengthened, with a renewed focus on the effectiveness of professional body supervision.
- HMRC-supervised firms should prepare for more frequent and detailed inspections and must maintain comprehensive AML documentation to demonstrate compliance.
- The reforms also encourage better information sharing between supervisors and law enforcement agencies, which may lead to increased scrutiny of ASP and TCSP activities.
- Company Formation and Beneficial Ownership Rules
Changes to company formation and beneficial ownership rules are particularly relevant for TCSPs:
- The sale of off-the-shelf companies is now considered a regulated activity, requiring firms to revise their onboarding procedures and contractual terms.
- There is a heightened emphasis on transparency around beneficial ownership, with new requirements aimed at preventing the misuse of corporate structures for illicit purposes.
- TCSPs must ensure that they have robust systems in place to verify ownership and monitor ongoing client activity.
- Mandatory Identity Verification and Governance Changes
Identity verification and corporate governance reforms further reinforce the AML framework:
- Directors of UK companies will be subject to mandatory identity verification, using biometric or cryptographic methods.
- Restrictions on foreign corporate directors and enhanced shareholder transparency are also being introduced.
- ASPs and TCSPs must ensure that their clients are aware of these changes and are prepared to comply with new Companies House requirements, including the provision of physical addresses and declarations of lawful purpose.
- Crypto Asset Risk Management
Finally, the reforms touch on emerging risks such as crypto assets.
- Crypto asset service providers will face stricter AML controls, and ASPs advising clients in this space must assess whether additional safeguards are needed.
- This may include enhanced risk assessments and the use of specialist AML tools to monitor transactions.
Aligning Your AML Framework
To prepare for the upcoming reforms, ASPs and TCSPs should begin reviewing their AML policies and procedures. Risk assessments must reflect emerging threats and updated regulatory expectations, while staff training must be continuous to ensure awareness of new compliance duties. Leveraging technology such as biometric ID verification and automated Know Your Customer (“KYC”) tools can help streamline processes and reduce errors.
A draft statutory instrument is expected later in 2025, followed by consultation and updated guidance from HMRC and professional bodies. Firms should stay informed and take proactive steps to align their operations with the evolving AML landscape. Early adaptation will not only reduce risk but also reinforce the firm’s credibility and professionalism in a more transparent regulatory environment.
How Complyport Can Help
Firms must act now to assess their current AML safeguards, systems, governance and readiness for compliance.
At Complyport, our experienced team monitors regulatory developments to help clients maintain the highest levels of compliance. Our Internal Audit Services include:
- Risk-Based Internal Audits: to ensure ongoing compliance and effective risk mitigation.
- Customised Audit Planning: to enhance internal controls and performance.
- Compliance Health Checks: to evaluate control effectiveness and identify gaps.
- Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Checks: to ensure adherence to evolving regulatory expectations.
- Internal Audit Reporting: to identify weaknesses and provide actionable recommendations.
- Systems Audit Trail Verification: to ensure the reliability and efficiency of systems and controls.
- Extraordinary Investigations and Ad-Hoc Assurance: to prevent regulatory breaches and respond to incidents.
Contact us today to speak with a Subject Matter Expert and discuss how we can help you manage the upcoming AML reforms.
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