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Fraud

UK Financial Crime Reform: Key Developments and Requirements for Financial Services Firms

Strategic Insights

— 1 min read

Financial services firms in the UK must navigate a complex landscape of reforms aimed at combating financial crime. The Economic Crime and Corporate Transparency Act (ECCTA) has introduced a new corporate offence of failure to prevent fraud, while the Money Laundering Regulations (MLRs) have been refined to enhance due diligence and digital identity verification requirements. Meanwhile, Companies House reforms and trust registration requirements are being phased in to enhance transparency. As a result, firms must refresh their written risk assessments, update customer due diligence policies, and implement "reasonable procedures" frameworks to prevent financial crime.

Key Takeaways:

  • The FCA's Dear CEO letter highlights the private wealth management sector's vulnerability to financial crime risks, including fraud, money laundering, and sanctions breaches.
  • Fraud volumes remain at record highs, with 4.2 million incidents reported in England and Wales during the year to March 2025, a 31% rise on the previous year.
  • The ECCTA introduces a new corporate offence of failure to prevent fraud, with defence based on "reasonable procedures" to prevent fraud, and an expanded identification doctrine to hold companies liable for senior managers' economic crimes.
  • Companies House reforms include registered email requirements, identity verification for directors/PSCs, and stronger filing controls, to be phased in over 2026-2027.
  • The HM Treasury's July 2025 MLRs Consultation Response clarifies CDD obligations, including enhanced due diligence triggers, source of funds checks, and digital identity verification.
  • Firms must document reasons for applying EDD to former PEPs and ensure MLRO sign-off does not require automatic oversight.
  • The FCA Financial Crime Guide has been updated to reflect MLR changes, including sanctions guidance, proliferation financing risk references, and transaction monitoring expectations.

Statistics:

  • 4.2 million fraud incidents occurred in England and Wales during the year to March 2025, representing a 31% rise on the previous year.
  • Prosecutions for money laundering offences in England and Wales increased by 36% in 2024, with convictions up 7%.
  • The FCA recorded 37 Final Notices, over £186 million in fines, and five criminal convictions in 2024-25.

Sources:

  • FCA's Dear CEO letter
  • ONS reports
  • Government's Economic Crime Plan 2 Delivery Report (September 2025)
  • FCA's Annual Report and Accounts 2024/25
  • HM Treasury's July 2025 MLRs Consultation Response
  • FCA Financial Crime Guide

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