UK Regulators Draft New AML Rules for Crypto Firms

This week, the UK’s HM Treasury released a concept of proposed changes to current money laundering regulations that focus on loopholes and evolving risks, including stricter requirements for crypto companies.

‘[The updates aim] To provide a more risk -based, proportional regime that is robust against financial crime while it remains workable for industry, ”according to the design document.

“The government has also committed itself to improving the sectoral guidelines on AML/CTF compliance with a series of issues and to publish individual guidelines on the use of digital identity verification for AML/CTF purposes.”

AML and CTF are financial industry Steno for anti-money laundering practices and terrorist financing.

The release follows a public consultation in 2024, which emphasized weaknesses in the British regime that is related to pooled customer accounts, trust registration, crypto business supervision and challenges in the customer’s due diligence.

The risks are important, according to the national risk assessment of money laundering and the terrorist financing report published In July. It discovered that the UK remains highly exposed because of its large and open economy.

In the meantime, the Economic Crime Survey 2024 of the Home Office estimated that 2% of British companies – around 33,500 – experienced known or probably white washing in the previous year. The investigation showed that fraud, much of it, cyber-in-switched and linked to overseas actors, is now good for more than 43% of all crime in England and Wales.

Crypto assets are increasingly a concern within this landscape. A Financial Conduct Authority, or FCA, survey in 2024 found 12% of British adults of cryptoassets and law enforcement noted that their growing role in money laundering schedules, often by service providers outside the VK.

The new draft regulations propose various changes for crypto companies. The Financial Conduct Authority will apply a broader “fit and correct” test to business controllers, to replace the current test of the useful owner, to ensure that complex ownership structures are recorded.

Other provisions will reduce the threshold for change-in-control mountings from 25% to 10%, in accordance with the Financial Services and Markets Act regime (FSMA).

This means that every party that acquires a 10% or greater interest – or significant influence – must inform the FCA.

Extra changes cover the customer’s due diligence, trust registration, correspondent bank restrictions and technical updates such as converting thresholds from euros to sterling.

The treasury invites feedback on the design until September 30, before making the regulations for parliamentary consideration at the beginning of 2026.