Draft Money Laundering and Terrorist Financing (Amendment) Regulations 2026

Rachel Blake Excerpts

Wednesday 3rd June 2026 General Committees

[The Economic Secretary to the Treasury (Rachel Blake)]

I beg to move,

That the Committee has considered the draft Money Laundering and Terrorist Financing (Amendment) Regulations 2026.

It is an honour to serve under your chairship, Mr Betts. The draft regulations aim to improving the effectiveness of the UK’s anti-money laundering regime. Money laundering is not a victimless crime. It fuels serious organised crime that damages our high streets and ruins the lives of people who fall victim to fraud, human trafficking and the drugs trade. It undermines the UK’s reputation as a safe and secure place to do business and, in doing so, undermines the interests of legitimate businesses.

As new technologies emerge and criminals find new ways to launder illicit funds, the Government are taking action to turn the tide on dirty money. This includes a new high street organised crime unit, which is being set up by the National Crime Agency, backed by £30 million of additional funding over the next three years. It will target cash-intensive businesses, such as barbershops, vape stores, mini-marts and sweetshops, which are exploited by criminal groups to conceal their activities.

The draft regulations represent a significant update to the money laundering regulations, which require financial institutions and other regulated businesses to take measures to avoid being used by criminals to launder the proceeds of crime, and to ensure that any attempts to do so are detected and flagged to law enforcement. They will make a number of changes to ensure that regulatory requirements are proportionate and risk-based, while closing loopholes and making the regime clearer and easier to use. This reflects the Government’s determination to build a more effective anti-money laundering system, sitting alongside the major reforms announced last year to our anti-money laundering supervision regime.

The draft regulations consist of measures on four core themes: making customer due diligence more proportionate and effective; strengthening system co-ordination; closing loopholes in coverage; and reforming registration requirements for the trust registration service. They will also make minor and technical changes to improve consistency and ensure that the UK complies with the standards set by the Financial Action Task Force, the global standard-setter on anti-money laundering.

First, the measures on customer due diligence aim to ensure that the checks required on customers are proportionate to the risks. This includes the removal of the requirement for regulated businesses to apply enhanced due diligence checks on countries listed by the FATF as “jurisdictions under increased monitoring”; these are countries found by the FATF to have strategic deficiencies in their regimes. The FATF does not require these checks, and the Government expect that permitting more flexibility here will enable firms to focus their scrutiny on the most serious risks to the UK, as set out in the latest national risk assessment of money laundering and terrorist financing. The Government estimate that this change alone will generate savings of £178 million per year for regulated firms, which can then be reinvested in higher-value compliance activity that identifies genuinely suspicious activity.

Other changes on customer due diligence include important measures to increase the availability of pooled client accounts for businesses with a legitimate need, and to facilitate continued access to banking services for customers in the event of a bank insolvency.

I turn to system co-ordination. The draft regulations will make changes to strengthen co-operation and information-sharing between anti-money laundering supervisors and other public bodies such as Companies House, which plays an increasingly integral role in the UK’s defences against illicit finance.

To close gaps in coverage, the draft regulations will bring the activity of selling off-the-shelf firms within the scope of regulated activities. They will also make changes to ensure that owners of cryptoasset firms do not escape fit and proper checks by the Financial Conduct Authority.

Finally, I turn to the trust registration service. The draft regulations will make a number of changes to close loopholes that would be leveraged to obscure asset ownership; to improve transparency of beneficial ownership of trusts with significant UK connections; and to refine registration requirements for other types of trust.

In summary, the draft regulations contain measures to build a stronger, more risk-based and therefore more effective anti-money laundering regime. I commend them to the Committee.

--- Later in debate ---

[Rachel Blake]

I thank the hon. Member for North West Norfolk for his analysis and for his support for the draft regulations. I am grateful to him for saying that he hopes I will be able to address some of his points, because I wrote down all nine themes. Whether I can address them all as fully as I would like, I am not sure.

I am glad that he raised the Financial Action Task Force list, because I have spent some time over the past few days considering its impact. He is absolutely right to probe on the justification and the approach that will be taken. Some countries on the FATF increased monitoring list are recognised as presenting regional more than international risks, perhaps due to the lack of a specialist in the internationally facing financial sector or due to strict currency controls. The FATF recommends mandatory enhanced due diligence only for countries on the separate “Call for Action” list, which the hon. Member highlighted. That will mean that there is still an opportunity for enhanced due diligence, but the focus will be on those countries that are mandated by the Financial Action Task Force. This is an area for continued scrutiny, and that is something that I will do.

The hon. Member asked about the realisation of savings. Those savings were estimated in terms of the sector, and there is an expectation that it is the sector that will focus on delivering them.

A bank insolvency is obviously a very unusual event, and we are putting in place the appropriate measures to respond to that. The timing of the approach to crypto and vulnerabilities will relate to changes in controlled provisions; I believe that they will come into force for crypto firms on 25 October 2027, which will coincide with the introduction of new financial services regulatory regimes for cryptoassets.

I will come back to the hon. Member on the estimated impact and the evidence base for off-the-shelf companies. He asked for further information about the impact assessment and why more benefits cannot be monetised; I hope that he will accept a written response.

I am confident that the draft regulations will take us further forward in tackling money laundering.

Question put and agreed to.