UK Financial Intelligence Unit faces criticism ahead of 2027 FATF evaluation

The UK Financial Intelligence Unit (UKFIU) has been singled out as one of the most materially significant structural weaknesses in the country’s economic crime system, according to a new report from the Royal United Services Institute (RUSI).

The criticism comes from the RUSI UK FATF Mutual Evaluation Taskforce, a group of experts from the private sector, law enforcement, government, academia and civil society acting as a “critical friend” ahead of the UK’s assessment by the Financial Action Task Force in June 2027. The taskforce first met in October 2024 and is submitting independent evidence to the FATF assessment team.

Resourcing and presentation

The UKFIU sits within the National Crime Agency and, according to the taskforce’s second meeting report published on 23 July, has reportedly not met its resourcing targets despite reform commitments. The report describes the unit as a significant vulnerability and recommends that resourcing and capability gaps be resolved.

Part of the problem is presentational, the taskforce found. The UKFIU is housed within the National Economic Crime Centre, with the NECC director also holding the UKFIU director role – an arrangement international partners do not always understand, which may distort views on the UK’s capacity to cooperate internationally.

The taskforce acknowledged that the UK narrative may point to operational successes such as Operation Destabilise, the NCA-led investigation into Russian money laundering networks, and Operation Machinize, the crackdown on cash-intensive high street businesses, as evidence that its use of financial intelligence has been effective by alternative means.

Risks that have grown since 2018

Fraud, virtual assets, professional enablers and professional money laundering networks are identified as the risks that have grown most significantly since the UK’s previous FATF evaluation in 2018. The report warns that the UK’s oversight of virtual assets has not kept pace with their growth, and that crypto-enabled illicit finance is now linked to Iran, Russia and questionable political party donations.

Economic crime resourcing has been diverted elsewhere even though the underlying risk has not reduced, the taskforce argues, and competing priorities have affected flagship sanctions work. It also questions whether the UK has a clear grasp of domestic corruption risks in local government, despite the expansion of the City of London Police Domestic Corruption Unit backed by £15 million of new funding announced in 2025.

Fintech and AI flagged as key risks

The taskforce agreed with the 2025 National Risk Assessment that fintech is a key risk for the UK, and considers that this risk has grown substantially since 2018 through the expansion of electronic money institutions, payment service providers and open banking. These technologies now represent a significant and under-scrutinised segment of the financial sector, with AML controls that have not kept pace. The report also notes that while the NRA acknowledges AI as a risk, its use in money laundering is not fully understood.

Professional enablers remain the gap

The report concludes that the UK enters its 2027 evaluation with genuine strengths, including advances in public-private partnership and progress on its beneficial ownership register – but that these successes are concentrated among banks, while progress in legal services and accountancy remains largely absent. Professional enablers have grown, not decreased, in importance, and the report recommends strengthened supervision.

An NCA spokesperson told Global Government Finance that preparations for the FATF assessment are well underway, including gathering data and case studies to demonstrate the effectiveness of the UK’s regime, and that the agency welcomes the rigorous and technical review that assessors will undertake.

The taskforce’s lead author is Veronica Stratford-Tuke, research fellow at RUSI’s Centre for Finance and Security. Members include the States of Guernsey director of financial crime policy Richard Walker, Transparency International UK senior investigations lead Ben Cowdock, and representatives from HSBC and Standard Chartered. The UK assumed the two-year FATF presidency on 1 July 2026.

Article Credit: https://www.globalgovernmentfinance.com/ukfiu-rusi-taskforce-criticism-ahead-2027-fatf-evaluation/