Bribery, fraud and anti-money laundering | UK Regulatory Outlook July 2025

Failure to prevent fraud: the clock is ticking! 

Preparations should be well under way for businesses to ensure they have reasonable procedures in place to prevent fraud before the new failure to prevent fraud offence comes into force on 1 September 2025. 

For more on what businesses should do to prepare, see our video series (Failure to prevent fraud) and read our Insight (Are you prepared for the Failure to Prevent Fraud offence?).

FCA finalised guidance on the treatment of PEPs for anti-money laundering purposes 

The Financial Conduct Authority (FCA) published finalised guidance for firms on how to apply a proportionate and risk-based approach to UK politically exposed persons (PEPs), their relatives and close associates for money laundering purposes. 

The revisions reflect changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), and is of interest to FCA-supervised firms, individuals and organisations working with supervised firms, financial services trade associations, individuals who meet the definition of a PEP and any other parties interested in the FCA's anti-money laundering supervision. 

Among other things, the guidance makes changes to senior management approval for signing off business relationships with PEPs and reflects changes to the MLRs  and clarifies that firms should treat domestic PEPs as lower risk unless there are other risk factors apparent that are unrelated to their PEP status. 

Government response to consultation on Money Laundering Regulations 

As previously reported, HM Treasury published a consultation in 2024 on improving the effectiveness of the MLRs, which requires businesses to identify and prevent money laundering and terrorist financing. 

HM Treasury has now published its response, detailing amendments that will be made to the MLRs to clarify requirements and ensure customer due diligence is targeted at high-risk activity and the issues which the government intends to address through guidance. Proposed amendments to the MLRs include: 

• enhanced due diligence on complex transactions;
• enhanced due diligence on high-risk third countries;
• due diligence on pooled client accounts; and
• due diligence triggers for certain non-financial firms. 

The government intends to publish the draft statutory instrument in the coming months for technical feedback, before laying in Parliament later this year if parliamentary time allows. 

Updated HM Treasury advisory notice on high risk third countries 

HM Treasury updated its Money Laundering Advisory Notice: High Risk Third Countries, which reflects changes to the list of high-risk third countries as defined in Regulation 33(3)(a) of the MLRs, following updates made to the lists of the Financial Action Task Force (FATF) in June 2025. 

The MLRs require UK regulated firms to apply enhanced customer due diligence in relation to high-risk third countries. Following review, the FATF added Bolivia and the Virgin Islands (UK). Croatia, Mali and Tanzania were removed from the list of high-risk third countries. 

See the FATF update.