HM Treasury has published draft Money Laundering and Terrorist Financing (Amendment and Miscellaneous Provision) Regulations 2025 (“the SI”) alongside a note detailing the policy intention of the SI.

The consultation which runs until 30 September 2025 sets out the following as being the key proposed amendments which will impact accountants and auditors:

Making customer due diligence more proportionate and effective:

Policy Intent: Ensure enhanced due diligence (“EDD”) measures are targeted, evidence-based, and proportionate, so that firms can focus their efforts on the transactions and jurisdictions that present the greatest risk. This should improve the effectiveness of the UK’s anti-money laundering regime, reduce unnecessary burdens on business, and ensure that resources are used where they have the greatest impact:

• High-Risk Third Countries:
  • The SI updates when EDD is required in relation to a person or transaction linked to a specific country. Firms are currently required to apply EDD to transactions or customers involving “high-risk third countries”, which is in turn defined as any country on the FATF’s ‘increased monitoring’ and ‘call for action’ lists.  The SI narrows this to focus specifically on “FATF call for action countries”. i.e. only countries on the ‘call for action’ list.  This ensures firms can direct their resources to jurisdictions which present the greatest risk to the UK;
• Complex and large transactions:
  • The MLRs currently require firms to apply EDD to all “complex or unusually large” transactions. However, this wording leads to confusion and, in some sectors, an overly cautious approach;
  • The SI clarifies that enhanced due diligence is required only for transactions that are “unusually complex or unusually large” relative to what is typical for the sector or the nature of the transaction. This change does not introduce a new obligation but rather refines the existing requirement to ensure that firms can focus their compliance efforts on transactions that present genuinely higher risks, rather than expending resources on routine transactions that do not warrant additional scrutiny.

Providing clarity on scope and registration issues:

Policy intent: Simplify compliance by reducing conversion complexity and reflect UK market practice post-EU exit:

• The SI converts all monetary thresholds for customer due diligence, reporting, and transaction triggers from euros to sterling (e.g. €10,000 becomes £10,000), with some thresholds adjusted to ensure the UK continues to meet international standards set by the Financial Action Task Force.”