The UK’s dirty money problem: will the new government walk the talk?

Russia’s full-scale invasion of Ukraine in 2022 prompted a welcome burst of activity against the UK’s longstanding tolerance of dirty money: financial sanctions, new enforcement units and real efforts to prevent abuse of the corporate transparency register. Two years into the Labour government, Spotlight on Corruption assesses whether that momentum has been maintained – and concludes that there has been a great deal of planning but far less action.

Lots of planning, less action

The government produced strategies on anti-corruption and fraud, with an anti-money laundering and asset recovery strategy still to come and a third Economic Crime Plan intended to link them together. It consulted on economic crime information sharing and on reforming AML supervision, and planned an illicit finance summit, since pushed back from June to December 2026.

The notable exception is legislation to make the FCA the AML supervisor for lawyers, accountants and corporate service providers – a reform that promises to fix long-standing failings. But with a transition period lasting until at least late 2028, there are signs the government has not fully appreciated the risks inherent in such a major shake-up.

Resourcing: piecemeal handouts

Funding increases have been welcome but small: more upfront funding for the Serious Fraud Office, £15 million in seed funding for the new Domestic Corruption Unit, top-ups through the Economic Crime Levy, and £30 million for the Online Crime Centre. Set against an estimated £100 billion laundered through the UK each year and £219 billion in annual fraud losses, this is small change. Meanwhile the nine Regional Organised Crime Units face a 25% budget cut.

Pressures are especially acute at the NCA. HM Inspectorate of Constabulary and Fire & Rescue Services found the agency does not have enough resources to meet government demands and branded its IT infrastructure “not fit for purpose”. Political pressure to tackle organised immigration crime has diverted staff from economic crime units: the Combatting Kleptocracy Cell has been running at 50% capacity, and 15 staff were surged from the International Corruption Unit to the Organised Immigration Team in January 2025. The agency now faces potential equal pay claims of more than £338 million, a 68% increase since Spotlight’s 2024 report.

Deregulation pulling the other way

Spotlight argues that positive rhetoric risks being undercut by efforts to ease regulatory burdens in pursuit of growth. Proposed changes would water down the Senior Managers and Certification Regime, introduced after the 2008 crisis and credited by 95% of firms surveyed in a 2023 evaluation with improving individual behaviour. Enforcement under the regime is already poor, with just one investigation opened in 2024 compared with 11 in 2023 and 12 in 2022, and the regime has never been used to hold senior individuals to account for major money laundering failures.

Changes to the money laundering regulations mean firms no longer have to conduct enhanced due diligence on all complex or unusually large transactions, and the requirement to apply EDD to all transactions involving FATF grey-list countries has been scrapped in favour of black-list countries only.

On supervisory reform, the government has opted to give the Office for Professional Body AML Supervision no new enforcement powers to police the transition, despite OPBAS itself finding continued failures that call into question the consistency and effectiveness of AML supervision. Spotlight’s AML tracker records the Council for Licensed Conveyancers issuing 22 times more informal than formal actions over seven years, despite an average of 87% of firms reviewed not being fully compliant. There is also no confirmation that the FCA will have powers to view material protected by legal professional privilege.

A mooted invite-only investor visa offering three years’ residency for a £5 million investment would, Spotlight warns, risk reviving the dirty money problems that led the previous government to scrap golden visas in 2022.

Complex laundering falling by the wayside

Money laundering prosecutions rose 37% in 2024/25, but Spotlight judges that the increase reflects agencies targeting money mules and high street launderers rather than the white-collar professionals who enable large-scale schemes. Convictions of regulated professionals for failing to disclose suspicions have fallen by 100% since 2013-14, with just two convictions in the last seven years, and there has still been only one corporate criminal conviction of a bank for money laundering, in 2021.

Five priorities for the Burnham government

Spotlight recommends that the new administration champion ambitious implementation of the Anti-Corruption Strategy; use December’s Illicit Finance Summit to step up UK leadership; crack down on professional enablers through strong criminal enforcement using the NCA’s new enablers coordinator; remove criminal justice barriers to complex dirty money cases through sustained resourcing and specialism among investigators, prosecutors and judges; and create an economic crime fighting fund that reinvests a greater share of fines and recovered assets back into law enforcement.

Article Credit: https://www.spotlightcorruption.org/the-uks-dirty-money-problem-will-the-new-government-walk-the-talk/