Money Laundering Regulations review

What’s changing

In July 2025, HM Treasury (HMT) published the response to its 2024 consultation on improving the effectiveness of the Money Laundering Regulations (MLRs).

The consultation focused on four themes:

• making customer due diligence more proportionate and effective
• strengthening system coordination
• providing clarity on the scope of the MLRs
• reforming registration requirements for the Trust Registration Service

The consultation followed HMT’s 2022 review of the UK's anti-money laundering (AML) regulatory and supervisory regime.

The 2022 review found that:

• the core requirements of the MLRs were mostly fit for purpose, but
• technical changes could be made to increase effectiveness and ensure proportionality for regulated firms and consumers

Our view

Making the Money Laundering Regulations more proportionate, risk-based and workable for all sectors is a step in the right direction by the government.

However, these proposed changes will do little to ease the regulatory burden felt by the legal profession and others.

Some helpful clarifications have been made, such as:

• simplifying due diligence
• defining ‘unusually complex’ transactions
• clarifying trust exemptions, crypto-asset technology, the roles of the national risk assessment and the system for prioritisation and digital identity adoption

But ultimately, this was a missed opportunity to drive meaningful reform.

We are disappointed no action has been taken to address the discrepancies in client due diligence timing, or to eliminate the risk of criminal liability associated with reliance on third-party checks.

This continues to be a source of frustration for lawyers and the public.

Our ability to shape these proposals was limited from the outset, as stakeholders were asked to comment only on a narrow set of provisions.

Our regulatory framework must be effective in combatting financial crime, but it must also be workable in practice for legal professionals and the wider economy.

What we’re doing

June 2024 – we called for any reforms to not place disproportionate and unnecessary obligations on the legal profession in our consultation response on improving the effectiveness of the MLRs

June 2022 – HMT published its review of the UK's AML regulatory and supervisory regime and laid a draft MLRs statutory instrument in Parliament

October 2021 – we called for a risk-based approach to be adopted in our responses to the statutory instrument consultation (PDF 202 KB) and the call for evidence (PDF 332 KB)

Summer 2021 – we took part in a series of targeted engagement sessions with HMT to represent the views of the profession

Next steps

HMT intends to make changes to the MLRs on:

• enhanced due diligence on complex transactions
• enhanced due diligence on high-risk third countries
• due diligence on pooled client accounts
• due diligence triggers for “certain non-financial firms”
• onboarding of customers in bank insolvency scenarios
• information sharing between supervisors and other public bodies
• supervisor cooperation with Companies House
• currency thresholds currently in euros
• regulation of sale of ‘off-the-shelf’ companies by trust and company service providers
• registration and change in control for crypto-asset service providers
• registration requirements for the Trust Registration Service

We look forward to helping develop and apply a proportionate regime that is effective in tackling economic crime and workable for solicitors.