AML Reform: Updates you need to know

26th June 2026

UK AML Reforms: What you need to know

The Money Laundering and Terrorist Financing Regulations 2026 Amendments came into force in June 2026, introducing 15 targeted reforms designed to sharpen the UK’s risk‑based approach, modernise oversight and close long‑standing loopholes. These reforms sit within a broader government push to modernise the AML/CTF framework under the Economic Crime Plan 2023–2026, responding to evolving threats such as crypto‑enabled laundering and fragmented supervision.

1. Narrower Mandatory Enhanced Due Diligence (EDD) Guidelines

Enhanced and additional due diligence requirements are refined. Instead of applying EDD to all ‘unusually complex or unusually large’ transactions it will now apply only to transactions that are ‘unusually complex or unusually large in each case given the nature of the transaction’,’ meaning the transaction should be considered and compared with what is normal for the sector and the type of transaction. This does not rule out EDD applied to ‘unusually large’ transactions which have no apparent legal or economic purpose.

EDD was previously required for individuals or transactions linked to specific ‘high-risk third countries’ as per the Financial Action Task Force’s (FATF) ‘increased monitoring’ (grey list) and ‘call for action’ (black list) indexes. This has now been narrowed to include only the ‘call for action’ list. The FATF grey lists should however, remain part of your risk assessments.

2. Cryptoasset Firms Face New Obligations

Cryptoasset exchange providers and custodian wallet providers are a major focus of the reforms: New enhanced customer due diligence rules for cryptoasset businesses come into force in February 2027. EDD will soon be required for cryptoasset exchange providers, custodian wallet providers and correspondent relationships involving cryptoasset businesses.

From October 2027, Crypto firms will transition into a full FCA-authorised regulatory regime under Financial Services and Markets Act (FSMA) and see new regulations on how they handle changes in control.

3. Simplified Thresholds and Currency Conversions

To reduce administrative burden and daily threshold inconsistencies, Euro‑denominated thresholds (e.g. €10,000) are replaced with Sterling equivalents (e.g. £10,000). This removes the need for exchange‑rate calculations and reduces compliance friction for lettings and estate agents AML operations.

4. Closing Loopholes for Trust & Company Service Providers (TCSPs)

The reforms clarify that the sale of off‑the‑shelf companies falls squarely within AML regulation. Off-the-shelf referring to pre‑formed entities sold for use, often with no prior trading activity.

TCSP services should be treated as business relationships and must apply customer due diligence across all services. These changes mark a move away from the easy-to-exploit anonymity provided by trusts

The 2026 package aims to:

Strengthen the UK’s defences against illicit finance
Maintain alignment with FATF standards
Reduce unnecessary compliance burdens
Improve clarity and consistency
Modernise the regime for emerging risks such as cryptoassets

What Should Firms Do Now?

To prepare for and comply with the reforms, firms should:

Update AML policies to reflect new EDD thresholds and requirements
Review risk assessments, especially for high‑risk jurisdictions
Train staff on the new transaction threshold updates
Prepare for crypto‑related obligations if applicable
Ensure TCSP services apply CDD consistently
Monitor supervisory reform developments as consolidation progresses

Conclusion

The UK’s 2026 AML reforms mark a decisive shift toward a more proportionate, risk‑based and modernised regulatory environment. By tightening rules where risk is highest particularly around cryptoassets and easing burdens where risk is lower, the government aims to build a more effective system that keeps pace with evolving threats.

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