HM Treasury and the Home Office have released the updated National Risk Assessment (NRA) of Money Laundering and Terrorist Financing.
This report is the UK’s definitive assessment of the threats and vulnerabilities facing its financial system. It underpins the approach taken by regulators, law enforcement, and government in tackling these risks; and it should inform how firms design and update their anti-money laundering and counter-terrorist financing (AML/CTF) frameworks.
In this article, we explain the key findings from the NRA and highlight the most significant threats and emerging risks.
Overall Risk Picture
Money laundering risk in the UK remains high, with recent estimates from the NCA that over £100 billion is laundered through or within the UK each year.
This scale reflects the UK’s role as a major global financial hub, attracting large volumes of legitimate international trade and investment, but also making it a target for those seeking to move or disguise illicit funds.
Terrorist financing threats also remain high. These typically involve smaller, harder-to-detect transactions that can nonetheless have serious consequences. The 2025 NRA notes that while the amounts involved may be low, the speed and methods used mean that firms should remain alert to even minor anomalies in customer behaviour or payment flows.
A notable development in this year’s assessment is the stronger connection between kleptocracy, sanctions evasion, and traditional money laundering.
Political instability and conflict have increased attempts by corrupt actors and sanctioned individuals to conceal their wealth and bypass restrictions, often using complex ownership structures and international intermediaries. Addressing these interconnected risks will require close cooperation between government, regulators, and the private sector.
Top Threats Identified
The NRA identifies several priority threats that shape the UK’s overall AML/CTF strategy. These are not new, but the report emphasises their persistence and evolving nature:
- Money laundering remains the most significant financial crime threat, driven by the sheer scale of international transactions and the attractiveness of the UK for high-value asset investment.
- Terrorist financing continues to operate through both legitimate and illicit channels, often involving small sums that are difficult to detect without targeted monitoring.
- Kleptocracy and sanctions evasion have become more prominent, as politically exposed individuals and sanctioned entities seek to disguise assets and circumvent restrictions through complex ownership structures and international intermediaries.
Key Money Laundering Methods
While the core money laundering methods have remained consistent, the NRA notes changes in how these are applied, and the channels criminals prefer to exploit.
- Cash-based laundering remains common, using money mules, Post Offices, and cash-intensive businesses to move and integrate illicit funds.
- Cryptoassets are increasingly used in layering schemes, with particular vulnerabilities identified in crypto service providers and the misuse of virtual IBANs.
- Professional enablers such as accountants, lawyers, and trust or company service providers, are exploited to create complex structures that obscure beneficial ownership.
- Trade-based laundering and property transactions continue to provide opportunities for disguising value transfers and integrating criminal proceeds into the legitimate economy.
Emerging Risks
The NRA draws attention to several emerging risks that are growing in scale and complexity. These developments will require regulated firms to adapt their detection and prevention measures.
- Artificial Intelligence (AI) is being used to produce convincing fraudulent documents, falsify identities, and bypass AML controls.
- Digital platforms offer opportunities for anonymous or pseudonymous transactions, making it easier for criminals to layer funds without detection.
- Education and sports sectors are identified as newly vulnerable areas, with misuse of school and university accounts and opaque funding flows in professional football highlighted as specific concerns.
Sector-Specific Risks
Different sectors face distinct vulnerabilities, reflecting the products they offer and the clients they serve. The NRA outlines where the risks are most concentrated:
- Retail and wholesale banking are highly exposed due to transaction volume and the complexity of cross-border flows.
- Wealth management and insurance sectors are vulnerable to misuse of complex investment products and policy structures.
- Cryptoasset firms, payment service providers and e-money institutions face heightened scrutiny as rapid growth and evolving business models outpace regulatory frameworks.
- Accountancy and legal services continue to present high risks, particularly in relation to company formation, trust management, and other activities that can obscure ownership.
Regulatory and Policy Response
In response to these threats, the NRA sets out ongoing and planned measures to strengthen the UK’s AML/CTF framework. These include commitments under the Economic Crime Plan 2 2023–26 and targeted reforms to the Money Laundering Regulations. The changes will:
- Introduce enhanced due diligence requirements for complex or high-value transactions.
- Close loopholes in trust registration obligations.
- Update rules for cryptoasset service providers to address sector-specific risks.
These measures are designed to close regulatory gaps, improve transparency, and ensure that UK standards keep pace with the methods used by criminal actors.
Final Thoughts
The NRA is a reference point that regulators will expect firms to consider when assessing their own exposure to financial crime risk.
This means firms should review their business-wide risk assessments, update customer risk profiles, and check whether existing transaction monitoring rules capture the methods and sectors highlighted in the report.
API Compliance can assist with NRA gap analysis, AML/CTF framework updates, and the development of targeted training programmes. If you would like to discuss how to align your approach with the UK’s latest risk assessment, please reach out using the contact form below.
