Financial crime regulatory developments: December update

Summary: The FCA has censured the Institute of Certified Bookkeepers (ICB) for major failings in its anti-money laundering (AML) supervision between January 2022 and July 2023. Responsible for overseeing over 3,000 bookkeepers, ICB breached key AML regulations by suspending inspections for nine months and failing to adopt a proper risk-based approach, which increased exposure to financial crime. The FCA stressed that strong AML supervision is essential to protect the financial system and signaled its readiness to act against professional body supervisors that fall short of its expectations. Meanwhile, government reforms are planned to make the FCA the Single Professional Services Supervisor, with OPBAS continuing oversight in the interim.

Impact: The FCA’s censure of the Institute of Certified Bookkeepers (ICB) has a significant impact on both regulators and professional bodies. It marks the first enforcement action against a professional body supervisor, sending a clear signal that the FCA will hold supervisory organisations accountable for weak anti-money laundering oversight. For ICB, the censure highlights the need to strengthen its supervisory framework for the 3,000 bookkeepers it oversees.

Publication Score

Summary: The FCA has introduced its AI Live Testing service to help firms safely trial artificial intelligence in real-world scenarios. Partnering with Advai and involving a number of well-known UK banks, the initiative focuses on areas such as debt resolution, financial advice, and customer engagement. It complements the FCA’s Supercharged Sandbox and will guide future regulatory approaches to AI, with the next testing cohort starting in 2026.

Impact: The FCA’s initiative will have several positive effects on the financial sector, including:

• Boost innovation with safeguards: Firms can experiment with AI in real-world scenarios under regulatory supervision, encouraging innovation whilst reducing risks of misuse.
• Strengthen consumer protection: By focusing on areas like debt resolution, financial advice, and customer engagement, the FCA ensures AI tools are tested for fairness, transparency, and safety before widespread adoption.
• Raise regulatory standards: This is the UK’s first AI live testing service in financial services, setting a precedent for how regulators globally may approach AI oversight.
• Build industry confidence: Collaboration with large UK banks shows strong industry engagement, helping build trust in AI adoption.
• Position the UK as a leader: The initiative signals the UK’s ambition to be at the forefront of responsible AI use in financial services, shaping international best practices.

Publication Score

Summary: The FCA Firm Checker is an online tool that lets consumers verify whether a financially regulated firm is authorised by the Financial Conduct Authority and permitted to provide specific services. Whilst it reduces risks by ensuring firms have the right permissions, it does not guarantee protection under schemes like the FSCS or Ombudsman. The tool also offers guidance on consumer rights, spotting scams, and where to find more detailed firm information via the Financial Services Register.

Impact: The FCA Firm Checker empowers consumers to make safer financial decisions. It also reduces the risk of falling victim to scams or dealing with unauthorised providers.

Publication Score

Summary: The FCA is seeking public feedback on its proposed rules for regulating crypto assets in the UK. The aim is to create a framework that supports innovation whilst ensuring consumer protection and market integrity. The proposals apply similar standards to crypto as in traditional finance, including clear information for investors, proportionate requirements for firms, and flexibility to encourage growth. The FCA emphasises that regulation cannot remove all risks but should help people invest with a full understanding of potential dangers, building a more open, sustainable, and trustworthy crypto market.

Impact: This is an important step toward setting clear rules for digital assets. By using standards similar to those in regular finance, the proposals aim to keep consumers safe, lower the chances of fraud, and build trust in the crypto market. At the same time, consultation supports innovation by making sure the rules are fair and flexible, allowing good firms to grow whilst stopping harmful practices.

Publication Score

Summary: The FCA fined a large UK building society £44 million for serious failings in its financial crime controls between October 2016 and July 2021. During this time, they did not maintain proper due diligence or risk assessments for personal current account customers and failed to monitor their transactions effectively. The FCA also found that some customers were using personal accounts for business purposes, which the building society was aware of but did not have the right processes to manage.

Impact: The FCA’s fine shows that banks and building societies must appropriately assess whether they have business customers using personal accounts and apply controls accordingly to ensure suspicious activity is monitored effectively and risk-based controls are applied.

Publication Score

Summary: The SFO guidance explains when, why, and how corporate compliance programmes are evaluated. It identifies six scenarios where evaluation may occur: deciding whether to prosecute, considering a deferred prosecution agreement (DPA), including compliance terms or monitorships in a DPA, assessing defences under the Bribery Act 2010 or the Economic Crime and Corporate Transparency Act 2023, and determining sentencing. The updated guidance also incorporates criteria for the new offence of Failure to Prevent Fraud, giving organisations clearer expectations on how their compliance frameworks will be judged.

Impact: The updated guidance brings greater clarity and consistency in judging compliance programmes, especially with new criteria under the failure to prevent fraud offence. Companies must strengthen frameworks, as weak compliance can affect prosecution, DPAs, sentencing, or defences.

Publication Score

Summary: The HMRC guidance on reporting serious tax avoidance or evasion explains how individuals can report suspected cases and outlines the Strengthened Reward Scheme. If the information provided helps HMRC recover at least £1.5 million in unpaid tax, the reporter may receive a discretionary reward of 15–30% of the tax collected (excluding penalties and interest). The guidance details who is eligible, reasons rewards may not be granted, and stresses that reports should be confidential, accurate, and not involve attempts to gather further evidence illegally.

Impact: It encourages individuals to report tax avoidance or evasion directly to HMRC, with the possibility of financial rewards if their information helps recover large sums. This strengthens HMRC’s ability to tackle tax crime, deters misconduct, and reinforces compliance across organisations and individuals.

Publication Score

Summary: The UK Government’s Anti-Corruption Strategy 2025 sets out a comprehensive plan to reduce the harm corruption causes to economic growth, national security, and democracy. Published by the Home Office, the strategy outlines measures to strengthen integrity in public institutions, protect the UK’s reputation as a trusted place to do business, and safeguard against threats from organised crime and kleptocratic elites abroad. It emphasises tackling corruption both domestically and internationally, ensuring that the UK remains resilient against illicit finance and maintains global leadership in promoting transparency and accountability.

Impact: The UK Anti-Corruption Strategy 2025 is intended to reduce the harm caused by corruption to growth, security, and democracy in the UK, and to UK interests overseas.

Publication Score

Summary: The UK Anti-Money Laundering and Countering the Financing of Terrorism Supervision Report 2024–25, published by HM Treasury, provides a yearly update on how regulators check that businesses follow anti-money laundering rules. It explains the main tasks they do, like checking risks, monitoring firms, making sure rules are followed, and working together across agencies. The report also shows the progress made in protecting the UK from illegal money flows, points out ongoing challenges, and shares details of enforcement actions taken.

Impact: The report signals a clear shift toward data-driven, risk-focused supervision, with a stronger emphasis on effectiveness over mere compliance, especially ahead of the UK’s next FATF Mutual Evaluation.

Publication Score

Summary: The European Commission press release announced that Russia has been added to the EU’s list of high‑risk jurisdictions due to strategic deficiencies in its anti‑money laundering and counter‑terrorist financing frameworks. Following a technical assessment under Delegated Regulation (EU) 2025/1393, the Commission concluded Russia meets the criteria for designation as a high‑risk third country.

Impact: This means banks and other financial firms in the EU must carry out extra checks and closely monitor transactions involving Russia.

Publication Score