UK Regulators Draft New AML Rules for Crypto Firms

The UK’s HM Treasury released a draft of proposed changes to current money laundering regulations this week that address loopholes and evolving risks, including stricter requirements for crypto businesses.

“[The updates aim] to deliver a more risk-based, proportionate regime that is robust against financial crime whilst remaining workable for industry,” according to the draft document.

“The government has also committed to improve sectoral guidance on AML/CTF compliance on a range of issues, and to publish separate guidance on the use of digital identity verification for AML/CTF purposes.”

AML and CTF are finance industry shorthand for anti-money laundering and counter-terrorist financing.

The release follows a public consultation in 2024, which highlighted weaknesses in the UK’s regime linked to pooled client accounts, trust registration, crypto business oversight and challenges in customer due diligence.

The risks are significant, according to the National Risk Assessment of Money Laundering and Terrorist Financing report published in July. It found the UK remains highly exposed due to its large and open economy.

Meanwhile, the Home Office’s Economic Crime Survey 2024 estimated that 2% of UK businesses—around 33,500—had experienced known or suspected money laundering in the prior year. The survey found that fraud, much of it cyber-enabled and linked to overseas actors, now accounts for more than 43% of all crime in England and Wales.

Within this landscape, crypto assets are increasingly a concern. A Financial Conduct Authority, or FCA, survey in 2024 found 12% of UK adults owned cryptoassets, and law enforcement has noted their growing role in laundering schemes, often through service providers outside the UK.

The new draft regulations propose several changes for crypto firms. The Financial Conduct Authority will apply a broader “fit and proper” test to firm controllers, replacing the current beneficial owner test, to ensure oversight captures complex ownership structures.

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

This means any party acquiring a 10% or greater stake — or significant influence — must notify the FCA.

Additional amendments cover customer due diligence, trust registration, correspondent banking restrictions and technical updates such as converting thresholds from euros to sterling.

The Treasury is inviting feedback on the draft until September 30, before finalizing the regulations for Parliamentary consideration in early 2026.