Financial crime regulatory developments: September update

Summary: Leading financial crime organisations have introduced a handbook designed to enhance international co-operation in tackling financial crime.

It provides practical tools for financial intelligence units, law enforcement agencies and prosecutors. Moreover, it encourages informal incorporation to speed up investigations and asset recovery. 

Impact: FIUs, law enforcement agencies and prosecutors should use this guidance to support best practices in tackling financial crime.

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Summary: This is a speech delivered by Steve Smart, joint Executive Director of Enforcement and Market Oversight at the FCA, delivered at the 1LoD Financial Crime Summit.

It emphasises that financial crime within UK financial systems undermines trust from the public, which affects economic growth and market confidence. Data from Lloyds Banking Group indicates that nearly 40% of fraud victims have lost confidence in online platforms.

It highlights that the FCA is working towards strengthening trust in the financial sector. In the last financial year, the FCA issued 37 Final Notices, secured 5 convictions, and imposed fines of over £186m, and brought charges against 19 defendants.

The focus is pro-active supervision, which is why the regulator has tried to stop fraud at its source by blocking more than 50 apps, over 1,600 websites and almost 20,000 non-compliant financial promotions.

Impact: Aligned with the UK government's growth plans, regulated firms should expect the regulator to continue working pro-actively to build the trust and confidence in financial markets that is key to the UK's future growth.

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Summary: This article tracks progress since the Economic Crime Plan 2 launched in March 2023.

Key statistics:

• Convictions: 3,756 money laundering convictions in 2024 (7% increase).
• Asset Recovery: £243.3 million recovered (29% decrease from previous year).
• Suspicious Activity Reports (SARs): Contributed to £230.4 million in asset denials.
• Companies House Reform:
  • 32,000 entities registered on the Register of Overseas Entities.
  • 106,000 addresses removed for misuse.
• Crypto Regulation: FCA received 372 applications; only 14% registered.

Impact: Further updates are planned for 2027 and 2028.

Data sharing and cross-sector collaboration is encouraged as part of continued progress efforts.

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Summary: This is a consultation paper articulating how the FCA plans on integrating the functions of the PSR entirely within the FCA.

This will see the FCA take on the PSR’s responsibilities, including for promoting competition and innovation in payment systems and the services provided by payment systems, as well as supporting the interests of consumers and businesses.

This consultation closes at 23:59 on 20 October 2025.

Impact: This is the opportunity for firms to provide their input and feedback on how the functions of the PSR should be integrated within the FCA.

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Summary: The SFO has secured £1.1 million from the sale of a Lake District house in an investigation involving its first use of an Unexplained Wealth Order (UWO).

Investigators traced criminal funds to a five-bedroom property called ‘Hope Springs House’ belonging to Claire Schools, ex-wife of convicted fraudster Timothy Schools. 

Impact: This article emphasises the need for regulated firms to complete source of wealth/funds checks to ensure that the funds it handles are not the proceeds of crimes.

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Summary: The UK Government has released guidance for businesses and organisations on the basics of sanctions compliance.

The topics covered include:

• Who must comply with sanctions regulations
• Overview of UK sanctions
• How sanctions work
• The sanctions lists and sanctions screening
• Sanctions regimes
• Ownership and control
• Financial sanctions
• Director disqualification sanctions
• Trade sanctions
• Immigration sanctions
• Transport sanctions
• Exceptions and licensing
• Conducting due diligence
• Circumvention

Impact: This guidance is useful for individuals within firms who do not necessarily have specialist sanctions knowledge and experience and may need upskilling on the basics.

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Summary: The UK government has prevented over £480 million in public sector fraud since April 2024, marking its largest-ever crackdown. Using AI and data-matching tools, it targeted Covid-related fraud, council tax discount abuse, pension overpayments, and housing list manipulation. The savings will help fund vital services like schools and hospitals, and a new AI tool is being rolled out across departments to proactively detect fraud risks in future policies.

Impact: This article indicates a major shift towards proactive fraud prevention, showing how technology is being used to protect taxpayer money and improve public services.

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Summary: As of 1 September 2025, a new corporate criminal offence—“failure to prevent fraud”—has come into effect under the Economic Crime and Corporate Transparency Act (ECCT) 2023. This law targets large organisations, holding them criminally liable if an employee, agent, or subsidiary commits fraud intended to benefit the organisation.

Impact: To avoid falling foul of this offence, firms need to demonstrate top-level commitment, proportionate procedures, and update their fraud risk assessments.

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Summary: The firm was reportedly charged with the “failure to prevent” offence in connection with an alleged research and credits repayment fraud. It is understood that six individuals, including one of the firm's former directors, were also charged with offences including cheating the public revenue and money laundering.

Impact: This is a reminder that the offence is one of strict liability, meaning senior management do not need to be aware of the offence to be held liable. Organisations must be able to demonstrate they have effective procedures in place.

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Summary: OFSI have issued a disclore notice against a bank in relation to breaching UK financial sanctions regulations by failing to promptly restrict access to an account belonging to a Designated Person under the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019.

OFSI warned the bank a day before the designation.

The DP was designated and listed publicly. The bank’s system flagged a potential match the next day, but due to internal delays, the account wasn’t restricted until eight days later. During this time, the DP withdrew £200 and made a £8.99 purchase.

Impact: This is a reminder that sanctions alerts must be actioned swiftly to avoid making funds available to Designated Persons.

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Summary: OFSI have issued a £152,750 fine for payments made through sanctioned Russian banks, breaching financial sanctions. The company failed to report the violations promptly and had inadequate screening processes, despite co-operating with the investigation.

Impact: This enforcement action is a stark reminder that screening and reporting processes need to prioritise compliance with sanction regimes.

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Summary: The Wolfsberg Group have published guidance on the provision of banking services to fiat-backed stable coin issuers. It offers a framework for understanding and monitoring these relationships using a risk-based approach.

Suggested framework:

• Jurisdictional and regulatory context of the issuer.
• AML/CFT, sanctions, and anti-fraud controls.
• Governance and oversight by issuer’s senior management.
• Use of third-party services and blockchain analytics.
• On-chain monitoring capabilities and transparency.
• Compliance with sanctions and ability to freeze assets.

Impact: Financial institutions must apply a tailored, risk-based approach when providing banking services to stablecoin issuers, ensuring robust oversight of both fiat and blockchain-based activities. The guidance highlights the need for enhanced due diligence, clear risk appetite alignment, and potentially on-chain monitoring to mitigate financial crime risks such as money laundering, sanctions evasion, and fraud.

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