Financial crime regulatory developments: April update

Cifas’ annual Fraudscape report for 2025. Key takeaways:
•    421,000 cases reported to the National Fraud Database (a 13% increase and the highest number on record). 
•    Identity fraud remains the most prevalent type of fraud reported with a 5% increase from 2023. This problem has been exacerbated by AI and generative technologies. 
•    Unauthorised sim swaps grew by a staggering 1,055%.
•    False applications grew by 10% in 2024, with false documentation being cited as the most common reason. This predominantly affected the banking and insurance sectors.

Impact: Firms should ensure that the findings of this report are considered as part of resourcing needs assessments and the review of how effectively controls are operating.

Emerging typologies outlined in this report should be considered as part of business-wide risk assessments.

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The fourth pilar of the FCA's annual work programme relates to financial crime. More specifically, the FCA aim to slow the growth of APP fraud, make it harder for organsed criminals to abuse regulated financial services, and continue to develop technology to prevent financial crime.

Impact: Firms should expect a more pro-active and co-ordinated supervision approach from the FCA, working closely in partnership with other regulators, governent bodies and law enforcement agencies.

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The FCA updates its Financial Crime Guide. Key takeaways:

• Firms should consider whether their controls are consistent with their Consumer Duty obligations (e.g. how fraud concerns are dealt with and customer engagement throughout the CDD process). 
• Senior management oversight should be pro-active and there should be evidence of meaningful discussion and challenge of financial crime concerns, such as from financial crime performance presented in the form of management information. 
• Transaction monitoring processes should focus on intelligence led monitoring, including dynamic typology tuning and integrated customer risk logic. Governance around transaction monitoring should also be robust, including around explainability, testing and oversight controls.

Impact: Consumer Duty should be considered alongside financial crime controls.

Firms should be able to demonstrate pro-active consideration of financial crime risk by senior management.

Transaction monitoring processes need to be intelligence-driven and governance should be robust.

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As part of its AI lab, the FCA plan to launch an AI testing service in the summer of 2025. They are requesting comments on their proposed approach by 10 June 2025.  The testing is currently expected to run for approximately 12 months. The FCA plan to publish a report in Spring 2026 to evaluate the success of the live testing.

Impact: This initiative is designed to give firms the confidence to invest in AI systems in a way that drives economic growth.

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Lithuanian regulators have issued a €3.5m fine to a multinational bank over its anti-money laundering controls. The fine was issued after shortcomings in its monitoring of business relationships and transactions were identified. 

Impact: Firms should consider whether their monitoring of business relationships and transactions could be subject to reguatory scrutiny.

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The voluntary period for identity verification is open for business. More than 6 million individuals will need to comply in the 12 months after identity verification becomes a legal requirement later this year. This phased approach is designed to reduce the burden on companies.

Impact: Firms are now able to verify key account parties on Companies House in this voluntary period.

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Government press release on large investment in quantum technology to tackle financial crime. 
The cutting-edge technology uses the properties of the universe’s smallest particles to build ultra-powerful computers and sensors. 

The technology is already being harnessed, by using quantum computing’s unique ability to analyse complex data and detect subtle patterns, to tackle fraud, one of the biggest challenges facing society, which currently costs the economy £2.6 billion each year. 

Impact: The intended impact of this investment into quantum technology is to improve the ability to analyse complex data and subtle patterns to identify and manage financial crime.

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This publication outlines the scope and objectives of the second part of an independent review focused on the challenges of investigating and prosecuting fraud cases and the operation of the disclosure regime in the digital age.

Impact: Firms should stay updated on the findings and recommendations of the review to ensure compliance with any new regulations or guidelines that may be introduced.

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The UK will become the first country in Europe to ban the possession and supply of SIM farms – technical devices used to defraud the public.

SIM farms are technical devices capable of holding multiple SIM cards enabling criminals to send scam texts to thousands of people at once or set up ‘verified’ online accounts in large volumes. They increase the chances of innocent consumers falling victim to major financial losses.

Impact: The intended impact of this ban is to reduce the amount of consumers falling victim to fraud through the use of sim farms.

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Updates to UK Syria sanctions regulations have been made to help the people of Syria to rebuild the country and economy after the fall of Assad.

The government will be lifting sanctions on 12 entities. This will remove UK restrictions on sectors including financial services and energy production to help rebuilding efforts.
Sanctions imposed on members of the former regime and those involved in the illicit trade of Captagon will remain in place.

Impact: Firms' screening controls should be updated to reflect the updates to the Syria sanctions regulations.

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Barbershops and other cash-intensive businesses across England have been targeted by police and other law enforcement officers during a three-week crackdown on high street crime.

In total, 265 premises were visited across Operation Machinize, where officers secured freezing orders over bank accounts totalling more than £1m, executed 84 warrants and made 35 arrests.

The crackdown, which is part of the NCA’s continued disruption of cash being laundered in the UK, involved 19 different police forces and Regional Organised Crime Units, as well as national agencies including HMRC, Trading Standards and Home Office Immigration Enforcement.

Impact: Firms should review whether customers operating in these sectors are being appropriately risk-rated and should continue to report SARs for customers whose actual account activity is not consistent with their expected income or broader account activity.

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The UKFIU SARs Annual Report 2023-2024 highlights a 61% increase in refused DAMLs, with £240m in assets denied. The new SAR Portal enhances intelligence analysis. There were 872,048 SARs and 57,081 DAMLs submitted, with 1,785 AFOs obtained. Engagement with AML supervisors and international collaboration improved. The report underscores the role of SARs in combating financial crimes and outlines future developments like the SARs Digital Service to enhance reporting quality.

Impact: Firms should review the quality of their SAR submissions, as well as DAML requests, and whether it aligns with guidance issued by the NCA.

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OFSI blog outlining three key lessons from the recent HSF Moscow Penalty:

• Understand your exposure to sanctions risks, especially firms operating in higher risk environments and parent companies with subsidiaries in areas with elevated sanctions risks.
• Adhere to internal sanctions policies and processes, regardless of seniority. Failure to comply with internal processes is likely to negate OFSI’s mitigating factor of having them in place.
• Fully consider ownership and control, beyond just whether an entity is directly subject to sanctions. OFSI views failure to properly consider and identify clear ownership more poorly than an incorrect but good faith assessment of control.

Impact: The key lessons outlined within this publication should prompt firms to perform their own gap analysis to assess whether the enforcement action against HSF Moscow highlights any gaps, or areas of ineffectiveness, in their own control environment.

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This report outlines OFSI’s assessment of threats to sanctions compliance involving UK property and related services firms since February 2022. Key takeaways include:

• UK property and related services firms have almost certainly underreported suspected breaches of financial sanctions. There were significant delays in the identification and reporting of suspected breaches.
• It is almost certain that designated persons (DPs) have breached UK financial sanctions by making or facilitating transactions for the benefit of their UK properties without or outside the scope of an OFSI licence or applicable exception. The majority of suspected breaches related to payments made by DPs or connected entities for the maintenance of UK properties.
• Almost half of suspected breaches related to UK residential property owned or let by DPs. The remainder were linked to UK commercial properties, investments into UK properties, the use of UK property firms by DPs to facilitate overseas business interests and client relationships, and the renewal or continuation of property-related contracts (including insurance) on behalf of or for the benefit of DPs.

Impact: The findings of this sector-specific report should be considered as part of risk assessments and adherence to relevant sanction regimes.

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The Centre for Finance and Security has launched a Maritime Sanctions Taskforce. This initiative brings together UK government officials, academic experts, and private sector executives to critically assess the current maritime sanctions regime against Russia.

The Taskforce will focus on the effectiveness of these sanctions, particularly in countering the abuse of the oil price cap and the operational tactics employed by Russia’s shadow fleet.

Impact: It would be prudent to closely monitor any future regulatory developments in the maritime sanctions space, specifically those relating to Russia.

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The SFO has issued its Business Plan for 2025-6. Key takeaways:

• The SFO intends to improve the timeliness of case progression, which has already seen the opening of eight new investigations.
• It will be launching its refreshed Corporate Guidance in anticipation of the new Failure to Prevent Fraud offence which becomes effective in September.
• The push for new initiatives, such as the whistleblower incentivisation reform, will continue.
• Technology Assisted Review (TAR) will be rolled out which can help to review documents up to 40% faster than the standard method.

Impact: Firms should expect more timely case reviews from the SFO and keep an eye out for corporate guidance on the new Failure to Prevent Fraud offence.

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This document provides detailed guidance on how corporate can co-operate with the SFO and potentially avoid prosecution for corporate criminal offences.

Corporates are encouraged to self-report suspected wrongdoing to the SFO. Prompt self-reporting and full cooperation can lead to an invitation to negotiate a deferred prosecution agreement (DPA) rather than face prosecution, unless exceptional circumstances apply.

Genuine cooperation includes preserving digital and hard copy material, presenting facts on suspected criminal conduct, and engaging early with the SFO on any internal investigation

Impact: Firms should update their fraud response procedure to ensure it aligns with this guidance issued by SFO.

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