A company that fails to update its anti-money laundering controls in line with the United Kingdom's evolving regulatory requirements faces enforcement action, blocked banking relationships, and potential criminal liability. These are not theoretical risks. The Financial Conduct Authority (FCA) and His Majesty's Revenue and Customs (HMRC) have each intensified supervisory activity. Additionally. The consequences of non-compliance now reach beyond fines into the loss of operating licences and correspondent banking access.
The United Kingdom's AML legislative regime was significantly strengthened through amendments to its money laundering legislation, with key provisions taking effect in 2024 and 2025. Regulated businesses – including financial institutions, payment service providers, professional service firms, and certain high-value dealers – must meet enhanced know your customer (KYC) and beneficial owner verification standards. Companies operating in or through the UK should treat compliance reviews as an immediate priority, not a scheduled task.
This alert sets out exactly what changed, which business categories are affected, and the five actions international companies should take without delay.
What changed and when it took effect
The UK's money laundering rules now impose more demanding requirements across three areas: beneficial owner identification, customer due diligence, and suspicious activity reporting.
On beneficial ownership, regulated entities must verify the identity of any beneficial owner holding a qualifying interest in a customer entity. The threshold for triggering enhanced checks is lower than in prior iterations of the rules. Companies registered at Companies House (the UK's central company registry) are now subject to identity verification requirements for persons with significant control. This change took effect from early 2025 as part of the Economic Crime and Corporate Transparency reforms.
On customer due diligence, enhanced due diligence is now required for a broader set of high-risk relationships. This includes customers from jurisdictions on the UK's high-risk third country list, relationships involving correspondent banking arrangements, and any credit facility extended to politically exposed persons or their close associates. Firms must document the purpose and intended nature of each relationship at the outset – not on an exception basis.
The Financial Services Authority's successor, the FCA, has also issued updated guidance on transaction monitoring thresholds. Automated monitoring systems must be calibrated to the current risk profile of each customer segment. Static rule sets that were configured several years ago are unlikely to satisfy a supervisory review today.
For tax-related reporting obligations, HMRC's supervisory remit over accountants, tax advisers, and trust service providers has expanded. Firms in these categories that are not FCA-authorised are nevertheless subject to HMRC's AML oversight regime and face the same enforcement consequences.
To understand how these obligations interact with banking licence and capital markets authorisation requirements, see our analysis of banking and finance law in the United Kingdom.
Which businesses are affected and the compliance deadline
The updated obligations apply to all entities within the UK's definition of a "relevant person" under money laundering legislation. The principal categories are:
- Credit institutions and payment service providers, including electronic money institutions
- Investment firms and asset managers under FCA authorisation
- Auditors, accountants, tax advisers, and insolvency practitioners
- Legal professionals handling client funds or property transactions
- High-value dealers and estate agents above the applicable transaction threshold
International companies with a UK branch, subsidiary, or regulated affiliate fall within scope. So do non-UK firms that provide regulated services to UK clients through passporting or equivalent arrangements – though the post-Brexit position on passporting has reduced this category significantly.
The beneficial ownership verification requirements at Companies House apply to all UK-registered companies, not only those in regulated sectors. Any company with a person of significant control must ensure that individual has completed identity verification. The deadline for existing companies to comply passed in phases throughout 2025. Any company that has not yet completed this process is currently in breach.
For businesses active in securities issuance or listed debt, the interaction with capital markets regulation adds a further layer of diligence requirements. Our overview of capital markets law in the United Kingdom addresses those obligations in detail.
To receive an expert assessment of your AML compliance position in the United Kingdom, contact us at info@ferrazwhitmore.com.
Immediate actions for international companies
The following five steps reflect the minimum response required for companies that have not yet conducted a structured compliance review against the updated rules.
First, audit your beneficial owner register. Verify that every beneficial owner and person of significant control has been identified, documented, and – where required by Companies House rules – identity-verified. Gaps in this register expose the company to regulatory sanction independently of any other compliance failure.
Second, reassess your KYC procedures. Review whether your current customer due diligence procedures meet the updated standard for each customer risk tier. Enhanced due diligence must now be applied at the point of onboarding, not triggered retrospectively by a suspicious event. Firms that rely on periodic refresh cycles without event-driven triggers should update their procedures immediately.
Third, review correspondent banking relationships. Any institution that maintains correspondent banking arrangements with foreign financial institutions must apply enhanced scrutiny to those relationships. Document the purpose, ownership structure, and regulatory status of each correspondent. Relationships that cannot be adequately documented should be suspended pending review.
Fourth, update transaction monitoring parameters. Static monitoring rules must be recalibrated to reflect current customer risk profiles. The High Court and Supreme Court of the United Kingdom have both addressed the standard of care expected from financial institutions in detecting and reporting suspicious transactions. Supervisors will assess whether your monitoring system was adequate at the time of any alleged failure – not at the time you last updated it.
Fifth, confirm HMRC registration if applicable. If your business falls within HMRC's supervisory scope. as an accountancy service provider. Trust or company service provider. Alternatively, tax adviser. confirm that your registration is current and that your appointed money laundering reporting officer is in place and properly trained.
Businesses with cross-border AML exposure may also benefit from reviewing how the UK's requirements compare with those in other European jurisdictions. Our alert on AML updates in Portugal provides a useful comparative reference for groups operating across both markets.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our banking and finance practice supports regulated institutions, international companies, and in-house legal teams on AML compliance, KYC programme design, beneficial ownership structuring, and supervisory investigations in the United Kingdom and across Europe. The firm's practitioners have advised on AML and financial crime matters before the FCA and HMRC, drawing on both English common law expertise and civil law tradition to deliver coordinated cross-border strategies. Engaging a lawyer in the United Kingdom with cross-border regulatory experience is particularly important when a group's obligations span multiple supervisory regimes. As an international law firm with deep knowledge of United Kingdom financial regulation, Ferraz & Whitmore provides results-oriented counsel without generic checklists. To discuss your AML compliance position, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.