The Government published its strategy to set the direction for the UK’s anti-money laundering and asset recovery system over the next three years on 15/9/26, stating that, “with asset recovery at the heart of our response, our aim is to take the profit out of criminality, disrupt criminals, and make the UK a hostile environment for dirty money”.
The focus is on a “more coordinated cross-system effort” with greater use of technology and enforcement powers for law enforcement to protect communities and strengthen our economy. The strategy refers to a lot of future consultations, reviews and legislation, rather than settled rules but it is useful to see the government’s direction of travel.
The strategy sets out three core objectives:
- Make the UK’s defences more effective and efficient, while making it simpler and safer for honest businesses to grow.
- Disrupt money laundering, dismantling high-harm criminal networks at home and abroad, including those operating on our high streets.
- Recover more criminal assets, returning money to law enforcement, victims and the public.
The plan is to deliver these objectives by focusing on the biggest threats (and ‘cutting back low-value “box-ticking” work’), sharing information and working together better, and giving investigators the tools to act faster.
From the perspective of law firms, here are some of the most relevant points:
- FCA AML supervision: Confirmation that the FCA will become the AML supervisor for legal, accountancy and trust & company service providers, reducing the number of AML supervisors from 25 to 3 (FCA, HMRC and Gambling Commission). This issue has not disappeared with the change of Prime Minister! (See our blog here for our further insights from the Law Society Economic Crime Conference on the transfer to the FCA)
- Enforcement powers: HM Treasury plans to consult on measures to strengthen supervisory enforcement powers under the Money Laundering Regulations (MLRs), including:
- expanded powers to make unannounced visits to regulated firms and search premises for cash
- strengthening the ability to hold directors accountable for MLR breaches
- Intelligence sharing: HMT has stressed the importance of intelligence sharing and collaboration between various bodies and law enforcement, particularly to tackle the threat posed by complicit professional enablers, as well as between Professional Body Supervisors (PBSs), such as the SRA, and the FCA during the transition to the FCA takeover. Whilst such collaboration is to be welcomed, there is limited information on how this will work, and given the concerns about legal professional privilege and tipping off, this may be easier said than done. It is notable that neither issue is mentioned in the Strategy document.
- Supervisory risk assessments and SARs: HMT will work with supervisors to agree common principles for supervisory risk assessments, and with law enforcement to enhance the use of intelligence from Suspicious Activity Reports (SARs) to identify the specific threats firms face. The direction of travel very much appears to be a more streamlined approach to AML across the regulated sector, which sounds sensible in principle, but brings us back to the ongoing concern that law firms and the legal sector are very different to financial institutions (and gambling establishments!).
- Companies House: Companies House data are firmly in HMT’s sights, although timescales appear to have slipped rather in relation to the plan to restrict those filing documents on behalf of companies to identity-verified employees or officers, or Authorised Corporate Service Providers (ACSPs), with the aim of strengthening the integrity of company records. We reported on this in January, with the original date for implementation to be the ‘spring/ summer’ of 2026, which then became November 2026. We note that Companies House Policy Paper, last updated on 5/8/26, now refers to ‘no earlier than November 2027’, with at least 6 months’ notice given before these requirements will come into effect. HMT is also planning to carry out a full review of the Discrepancy Reporting Regime, which it sees as burdensome for firms, again, to improve the integrity of Companies House data.
- MLRs consultation: Another consultation on the MLRs is planned for 2026/27 (following the last amendments to the MLRs at the end of June 2026) to focus on high-risk activity, to improve proportionality, and to reduce ‘unnecessary friction in key sectors such as financial and legal services’ (all of which were the aims of the last consultation as I recall!).
- SARs regime: A proposed review of the Suspicious Activity Reporting (SARs) regime to reduce low-value activity, including whether to raise the suspicion threshold for reporting in the Proceeds of Crime Act 2002 (POCA). This is in addition to the ongoing SARs portal upgrade to enhance its analytical capability and usability.
- Digital ID verification: You may recall from our March blog that the Government published guidance in February encouraging the use of digital ID verification for money laundering checks whilst also ensuring any such provider is on their Digital Verification Service (DVS) register. HMT will consider if further steps are needed to support the use of digital ID for AML checks to help make customer due diligence (CDD) quicker and easier.
No doubt we will be seeing much more about and from this Strategy as time goes on, so watch this space.