HMT’s 4th National Risk Assessment on Money Laundering and Terrorist Financing

 

The UK government and HM Treasury have recently published the 2025 National Risk Assessment (NRA) on Money Laundering and Terrorist Financing, along with a formal response to the 2024 consultation on improving the Money Laundering Regulations (MLRs). These developments mark an evolution of the UK’s financial crime framework.

 

2025 National Risk Assessment (NRA)

The 2025 NRA underscores that money laundering remains a significant threat to the UK. It identifies that the overall risk of money laundering continues to be high, with the country exposed to complex international laundering networks. The assessment highlights the increasing convergence between money laundering, kleptocracy and sanctions evasion and misuse of professional services to conceal the origin of illicit funds.

New technologies are being exploited by criminal networks to facilitate both money laundering and terrorist financing, with cash continuing to play a significant role; criminals are still relying heavily on cash-based businesses and physical money movement. Terrorist financing often involves small amounts of money but remain a persistent concern with its fluid methods and use of both licit and illicit financial channels.

The assessment is intended to inform the UK’s strategic and operational response to financial crime and will serve as a foundation for future regulatory and enforcement efforts, highlighting the strengthening of the UK’s defences and the evolving nature of the risks involved.

 

Reforms to the 2024 Money Laundering Regulations (MLRs)

Following the 2024 consultation, the government has confirmed its intention to amend the MLRs to improve their effectiveness and proportionality. The proposed reforms addressed existing loopholes around the registration of certain trusts and entities, enhancing customer due diligence requirements, particularly in relation to high-risk jurisdictions and complex transactions and introducing more consistent and streamlined requirements across the regulated sector, to reduce unnecessary burdens while maintaining robust controls. There was widespread support from respondents for efforts to clarify ambiguous obligations and ensure that regulatory guidance is more closely aligned with risk-based approaches.

 

Parliamentary Position on Financial Crime

The Economics Secretary of the Treasury reaffirmed the government’s commitment to safeguarding the UK’s financial system against money laundering and terrorist financing. An emphasis was placed on ensuring a balanced regulatory environment, deterring criminal misuse of the system while remaining proportionate for legitimate businesses and institutions. The government has positioned itself as continuing to lead internationally on anti-money laundering compliance, pointing to enhanced cooperation with law enforcement, supervisory bodies and regulated sectors.

 

Implications for Legal and Regulated Professionals

The NRA and proposed regulatory changes are particularly significant for law firms, estate agents, accountancy practises and financial institutions. Recent enforcement actions by the FCA have highlighted the high cost of non-compliance with the MLRs and other financial crime legislation and regulation.

Firms are advised to review the latest developments carefully and ensure risk assessments, policies and procedures and other financial crime controls such as transaction monitoring systems are reviewed and updated to reflect the money laundering and terrorist financing risks and typologies their firm is exposed to.

 

Please reach out to info@objectivus.com if you have any questions or require further clarity on any of the points raised.