Financial crime regulatory developments: November update

Summary: The Financial Action Task Force (FATF) published its 2025 Guidance on Asset Recovery Best Practices, aimed at strengthening global efforts to ensure that 'crime does not pay'. The guidance provides practical recommendations for jurisdictions to improve the identification, freezing, confiscation, and return of criminal assets.

Key points include:

• Enhancing international cooperation between countries to trace and recover illicit assets.
• Improving legal frameworks to remove barriers that hinder asset recovery.
• Promoting proactive use of financial intelligence and cross‑border collaboration.
• Encouraging transparency and accountability in how recovered assets are managed and returned.
• Sharing best practices to help countries build stronger institutional capacity and align with global standards.

Impact: The impact of this guidance is to raise the bar globally on asset recovery, making it harder for criminals to hide illicit wealth, while increasing compliance and operational demands on financial institutions and regulators. It shifts focus from simply detecting crime to ensuring stolen assets are recovered and returned.

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Summary: The UK Government proposed a major reform of the AML/CTF supervision regime by transferring responsibility from the current 22 Professional Body Supervisors (PBSs) and parts of HMRC’s role to the Financial Conduct Authority (FCA). The FCA will supervise legal, accountancy, and trust & company service providers (TCSPs) for compliance with the Money Laundering Regulations (MLRs).

Key proposals include:

• Centralised registration and gatekeeping: The FCA to register all in‑scope firms, conduct fit‑and‑proper checks, maintain a public register, and actively police the perimeter to prevent unregistered activity.
• Risk‑based supervision: FCA to apply a consistent, risk‑based approach across legal, accountancy, and TCSP sectors, using targeted reviews, inspections, and intelligence‑sharing to allocate resources effectively.
• Guidance, intelligence and enforcement: FCA to provide updated AML/CTF guidance, improve SARs information‑sharing, and have powers to impose civil penalties, suspensions, prohibitions, public censures, and initiate criminal proceedings.
• Accountability and funding: FCA decisions to be appealable in court, ensuring judicial oversight, with supervisory activity funded through firm fees on a cost‑recovery basis (supported initially by the Economic Crime Levy).

Impact: This reform aims will simplify and strengthen AML/CTF supervision, ensure consistency across professional services, improve intelligence‑sharing, and enhance enforcement against non‑compliance. It represents a shift from fragmented private‑sector supervision to a single public‑sector regulator (FCA), increasing accountability and effectiveness in tackling economic crime.

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Summary: The FCA’s November 2025 publication reviewed how firms conduct business‑wide risk assessments (BWRA) and customer risk assessments (CRA) under the Money Laundering Regulations. The review highlights both good and poor practices across multiple firms, focusing on how they identify, understand, assess, mitigate, and manage financial crime risks.

Impact: The FCA’s review highlights that weak or generic risk assessments leave firms exposed to financial crime, undermining compliance with the Money Laundering Regulations. By contrasting good and poor practices, the FCA sets clearer expectations for firms to adopt robust, tailored, and regularly updated risk assessments. This will drive stronger governance, better resource allocation, and improved resilience against money laundering and terrorist financing risks.

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Summary: The UK’s National Crime Agency (NCA), through the National Economic Crime Centre (NECC), has issued an Amber Alert highlighting the growing use of shadow fleets and illicit networks to evade international sanctions. These fleets typically involve vessels that conceal ownership, falsify documentation, or manipulate shipping practices to transport restricted goods, including oil and other commodities.

Impact: This alert underscores the heightened risk of sanctions circumvention through maritime networks, pressing UK firms to tighten controls and improve intelligence‑sharing. It signals regulators’ expectation that businesses proactively identify and disrupt illicit trade routes to protect the financial system and uphold sanctions integrity.

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Summary: The JMLSG released a consultation, running until 14 January 2026, which introduces updates in two areas of its guidance:

• Standing of the MLRO: Reinforces the requirement for MLROs to have due authority, independence, and access to all relevant information, including oversight of AML/CTF activities across group entities both in the UK and overseas. It also clarifies wording around delegation or appointment to another director or senior manager.
• Data protection: Provides additional guidance on handling subject access requests, including what information can be withheld and applicable exemptions. It also updates timelines by replacing the statutory 40‑day deadline with a requirement to respond 'within one month'.

Impact: This strengthens MLRO’s independence, authority, and accountability, with clearer expectations on delegation and oversight. Firms face enhanced governance requirements, ensuring unrestricted access to information across group structures, while data protection compliance processes must be updated to meet new SAR guidance and the shorter one‑month response deadline.

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Summary: The Serious Fraud Office (SFO) published guidance (Nov 2025) on how it evaluates corporate compliance programs. The guidance outlines six scenarios where evaluation is relevant: deciding whether to prosecute, considering a deferred prosecution agreement (DPA), setting DPA compliance terms or monitorships, assessing defenses under the Bribery Act 2010 and the Economic Crime and Corporate Transparency Act 2023, and factoring compliance into sentencing.

Impact: The guidance reinforces that effective, proactive compliance programs are critical to mitigating liability. Firms must ensure programs are not just “paper exercises” but embedded, risk‑based, and regularly reviewed, with clear accountability at senior management level.

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Summary: HMRC’s guidance explains how individuals can report serious tax avoidance or evasion and outlines the Strengthened Reward Scheme. If 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).

Impact: This scheme incentivises whistleblowing on large‑scale tax avoidance/evasion, strengthening HMRC’s ability to recover unpaid tax while reinforcing governance and compliance expectations for firms and individuals.

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