Money laundering in the UK undergoes first national risk assessment for five years

HM Treasury's publication of the National Risk Assessment of Money Laundering and Terrorist Financing 2025 in July is the fourth comprehensive evaluation of money laundering and terrorist financing risks in the UK – and comes five years on from its last national risk assessment (NRA) update in 2020.

The latest NRA sets out the progress made since the start of the decade, the action taken to address risks and the challenges that remain in strengthening the UK's financial system against financial crime.

The assessment sits alongside the Economic Crime Plan 2023-26, which aims to reduce money laundering and the government's upcoming fraud and anti-corruption strategies. The NRA underpins the UK’s compliance with the requirements of the Money Laundering Regulations and supports its obligations as a member of the Financial Action Task Force, which expects all countries to conduct NRAs and implement risk‑based regimes that respond to the risks identified.

Vulnerable sectors

While the NRA 2025 is a "look back"  document , the areas it highlights will give all firms – particularly those in the regulated sectors and subject to money laundering supervisions – guidance on what sectors are vulnerable to money laundering and where enforcement bodies might focus their attention and investigatory powers in the coming years. 

There are a range of cross-sector risks as well as those that are specific to the financial services and property sectors. 

UK-wide risks

• Shifting geopolitical context and sanctions evasion. The UK continues to be exposed to a high level of money laundering risk. In particular, since 2020, global instability from events such as Russia’s invasion of Ukraine, has intensified the convergence between money laundering, kleptocracy and sanctions evasion.
• Technology‑enabled risks. Rapid adoption of new financial technologies has contributed to increasing risk. Notably, electronic money institutions, payment service providers, cryptoassets and the use of artificial intelligence (AI) can enhance criminals’ ability to move funds covertly and at speed, often across borders and outside traditional controls.
• High volumes of cash‑based laundering. The risk from cash-based money laundering through smuggling, cash intensive businesses and money mule activity remains high.
• Financial and professional services. There is ongoing targeting of financial services firms by organised criminal groups.
• UK companies. The risk of money laundering through misuse of UK corporate structures remains high, such as through the use of front companies and cash intensive businesses.

Financial services

The risk rating for the financial services sector remains largely the same as 2020. However, the risk has remained high. 

• Retail banking. Due to its scale, high-transaction volumes, simple onboarding and mass‑market reach, the overall risk score remains high. The NRA notes that the rapid move to online banking and the growth of challenger banks have increased the sector's overall risk profile, particularly due to digital onboarding risks, including AI‑enabled identity fraud.
• Electronic money institutions and payment service providers. The money laundering risk has increased from medium to high since 2020. Main drivers of this include the rapid scaling of the sector, increased complexity and diversification of services, greater cross-border options, and exposure to high-risk jurisdictions. The NRA accepts that risk mitigation has improved, but increased exposure and use of electric money institutions (EMIs) has contributed to the higher risk score.
• Cryptoasset service providers. The risk score has also increased from medium to high since 2020. The risk score is being driven by an increase in both criminal use of cryptoassets and legitimate use by the general public, enhanced by the speed and greater exposure to high‑risk jurisdictions. The assessment notes increasing levels of cryptoassets obtained and laundered through illicit means such as cybercrime, ransomware and cryptoasset thefts.

Looking forward, HM Treasury and the Financial Conduct Authority intend to bring certain cryptoasset activities within the regulatory framework of the Financial Services and Markets Act, with the aim of reducing the money laundering risk through ensuring that appropriate systems and controls apply to relevant firms.

Property sector

Property purchases remains an attractive method for laundering illicit funds due to the large amounts that can be moved and the perceived stability of property as an asset. The NRA notes that prime and super-prime residential property are particularly lucrative to criminals as a stable asset to store value.

• Estate agency businesses. The money laundering risk for estate agency businesses (EABs) remains medium rated but has slightly risen since 2020 due to vulnerabilities to which the sector is exposed. The assessment notes an increase in the complexity of ownership and deal structures, with representatives from the sector reporting on the "extensive use" of private investment vehicles and special purpose vehicles (to purchase property since 2020. A shift towards remote processes during the Covid-19 pandemic also introduced new challenges to the sector in verifying the legitimacy of transactions. The most significant UK property money laundering risk continues to be the purchase of super-prime property, with reports of instances where high-end EABs request a defence against money laundering despite identifying a significant money laundering risk.
• Letting agency businesses. The money laundering risk has decreased from medium (2020 score) to low. This change in score reflects improved understanding within  the sub-sector, and implementation of MLR requirements. The NRA notes that regulated letting agency businesses are more likely to be exposed to high-risk persons, such as ultra-high-net-worth individuals and politically exposed persons), as well as high-risk products involving the use of complex legal arrangements. 

Osborne Clarke comment

The UK remains at high risk of money laundering, with the NRA identifying new areas of risk, as fraudsters and organised crime leverage new opportunities and technology. 

The government is seeking to combat the risk through multiple enforcement agencies and we can expect the areas of upgraded threat to be the focus of increased investigation and potentially enforcement action. In particular, EMIs and housebuilders who will be EABs when selling jointly with other third parties are likely to subject to continuing enhanced scrutiny.

Organisations need to take a proactive approach to AML risk assessment and ensure their detection systems and policies are up-to-date and adequate to mitigate the threats.

Michelle Tong, Senior Paralegal at Osborne Clarke, assisted in writing this Insight.