The government has published its draft Money Laundering and Terrorist Financing (Amendment and Miscellaneous Provision) Regulations 2025 for technical consultation, after bringing forward targeted amendments to close regulatory loopholes, address proportionality concerns and account for evolving risks.
The draft statutory instrument forms part of the government’s response to a public consultation on improving the effectiveness of money laundering regulations, which highlighted weaknesses including issues with pooled client accounts, trust registration and the practicalities of customer due diligence.
‘The draft legislation aims to deliver a more risk-based, proportionate regime htat is robust against financial crime whilst remaining workable for industry’, HM Treasury wrote in an accompanying policy note.
However the legislation has been criticised by experts, with one describing the draft as ‘all talk and no real change for law firms’. Luke Haddon, money laundering reporting officer at Keystone Law, said any simplification was present ‘in name only’ and the compliance load remained, particularly for conveyancers.
In an article published on LinkedIn, he explained:
“Conveyancing remains a high-risk area under both the National Risk Assessment and the SRA’s sectoral assessment. Property transactions continue to be one of the most attractive routes for laundering illicit wealth, and the draft regulations do nothing to lessen the burden here.
“Firms must still conduct deep, proportionate checks into the origin of funds, going beyond surface-level documentation to test legitimacy where the picture is complex, layered, or unusual. The evidential burden sits firmly with the firm and the reforms do nothing to shift that.”
And, he added, pooled client accounts require more oversight, not less, expectations in client due diligence obligations remain high, guidance remains uncertain and narrowing the definition of high-risk jurisdictions ‘won’t work in practice’.
‘For practitioners, this is less about genuine simplification and more about reframing the burden’, Haddon said. ‘The compliance load remains – it is simply redistributed’.
HM Treasury is inviting feedback from regulated firms, supervisors, other government departments and interested stakeholders on the practical operability, clarity and effectiveness of the draft provisions.
‘This is a draft SI and should not be treated as final’, the policy note stresses.
“It is being published for technical checks, such as any significant errors or oversights in the legal drafting that would mean that the provisions in this SI would not achieve the desired outcomes explained in this note, or that could lead to other significant unintended consequences.”
The technical consultation is open until 30 September 2025, with the final instrument due in early 2026, subject to feedback and Parliamentary scheduling.
View the draft regulations and policy note. Responses should be sent to Anti-MoneyLaunderingBranch@hmtreasury.gov.uk
2 responses
An excellent article by Luke Haddon.
There is a tension at the heart of government. The Prime Minister and the latest Housing Minister speak the language of a liberated housing market when they make statements like “Build, Baby, Build”. However, Treasury civil servants have become ossified, in a one-sided posture on money laundering, and the causes of money laundering.
Actual money laundering is far removed from the conveyancing world. It is a fact that the number of prosecutions of property lawyers for actual money laundering are, in the words of a leading regulatory specialist, ‘vanishingly small’. As someone once said facts do not cease to be such simply because they are ignored.
The Law Society has been ineffectual in its lobbying of government that the AML Regime is one of the primary reasons for delays in homebuying and elsewhere.
All property lawyers want is a fair, evidenced based approach to anti-money laundering measures. These draft regulations show that the government isn’t listening.
These changes were never really going to reduce the AML burden on conveyancing firms, which is around FWRAs, CMRAs, CDD, SoF/W, screening, training, etc., but these requirements are not going anywhere anytime soon!