The UK has published draft reforms to strengthen anti-money laundering, lowering the notification threshold from 25% to 10% and introducing “fit and proper” checks.
The UK financial regulator is making a major regulatory overhaul as the UK Treasury this week published draft amendments to existing anti-money laundering (AML) regulations, which aim to address emerging loopholes and risks and impose stricter requirements on crypto-asset businesses.
According to the official document , the updates aim to “implement a risk-based, proportionate and appropriate regime that is robust enough to combat financial crime while remaining viable for industry.” The government also committed to improving sector-specific guidance on AML and counter-terrorism financing (CTF) compliance, including dedicated guidance on the use of digital identities for AML/CTF purposes.
The draft follows a public consultation in 2024 that identified weaknesses in the regulatory regime around centralized customer accounts, trust registration, supervision of crypto-asset businesses, and challenges in customer due diligence. The July National Risk Assessment found that the UK remains at high risk due to its large economic size and high degree of openness.
Major changes to the crypto asset industry
The crypto-asset landscape has become increasingly concerning, with the Financial Conduct Authority (FCA) 2024 Survey finding that 12% of UK adults own crypto assets. Law enforcement agencies have noted the growing Vai of crypto-assets in money laundering, often via non-UK service providers.
The draft regulations propose three key changes for crypto-asset businesses. First, the FCA will apply a “fit and proper” test to corporate controllers, replacing the current beneficial ownership test, to ensure oversight of complex ownership structures. Second, the threshold for notification of a change of control will be lowered from 25% to 10%, in line with the Financial Services and Markets Act (FSMA), meaning that any party holding 10% or more of the shares will be required to notify the FCA.
Additional amendments include updating customer due diligence, the registration of trusts, restrictions on correspondent banking and switching the threshold from euros to pounds sterling. The UK Treasury is now inviting feedback on the draft until September 30, before finalising the regulations for parliamentary XEM in early 2026. The 2024 Economic Crime Survey found that 2% of UK businesses have experienced money laundering, while fraud accounts for more than 43% of all crimes in England and Wales.
