UK asks banks for feelgood stories about keeping out dirty money

The UK government has launched a call for evidence from banks and law firms to provide case studies demonstrating how they have prevented illicit funds from entering the country. The move comes as ministers seek to strengthen the UK’s anti-money laundering (AML) reputation ahead of a critical review by the Financial Action Task Force (FATF) in 2027. The FATF, a global watchdog, last assessed the UK in 2018, identifying significant weaknesses in its financial crime controls and labeling London as a potential haven for "dirty money."

The Treasury’s request asks financial institutions to submit real-world examples from 2022 onward of how they blocked high-risk clients or identified red flags in customer profiles. The government aims to showcase the effectiveness of the UK’s AML, counter-terrorist financing, and sanctions frameworks before submitting its evidence to FATF in October. An on-site review by FATF assessors is expected next summer, intensifying pressure on the UK to prove it has made meaningful improvements.

Despite increased enforcement efforts, the UK continues to face challenges in combating financial crime. Last year, the National Crime Agency estimated that £100 billion is laundered through or within the UK annually, with professional services firms often facilitating fraud, human trafficking, drug trafficking, and other organized crime. The UK’s own national risk assessment has consistently rated the legal sector as "high risk" for money laundering since 2017.

Moody’s, the credit rating agency, highlighted the scale of the challenge in a report earlier this year. While billions are spent annually on AML supervision, the persistent £100 billion annual laundering figure raises questions about the effectiveness of current measures. "When FATF examiners arrive in the UK, they may ask how much of that risk is really being reduced by the UK’s controls, intelligence, and enforcement," the report stated.

The FATF’s 2027 mutual evaluation will test the UK’s progress in strengthening its financial crime defenses. The first phase allows the government to present its own evidence, including cases where firms intervened to trigger state investigations or prosecutions. The Treasury has also requested examples of how companies adjusted their client acceptance policies after detecting financial crime risks.

A Treasury spokesperson emphasized the government’s commitment to tackling economic crime, stating: “We take firm and coordinated action across government and industry to crack down on economic crime. We have introduced new strategies, enhanced enforcement capabilities and increased funding designed to disrupt those seeking to abuse the UK economy."

The push for evidence reflects broader concerns about evolving threats, including AI-driven investment fraud and the rise of cryptocurrencies, which can obscure transaction origins. With FATF scrutiny looming, the UK must demonstrate tangible progress in reducing financial crime risks or risk reputational and regulatory consequences.

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