The UK’s fight against money laundering and terrorist financing is entering a pivotal phase. On December 8, HM Treasury published its 13th annual report on AML/CTF supervision, covering supervisory activity between April 6, 2024 and April 5, 2025. While this report appears routine at first glance, it has implications for firms, supervisors and the future shape of the UK’s financial crime framework.

 

This year’s report does more than catalogue supervisory statistics. It reveals a system under reform, increasing expectations on supervisors, and intensifying scrutiny on firms, particularly as the UK prepares for its next FATF assessment in 2028. 

 

Why this report matters 

 

The UK is preparing for FATF’s new, more demanding methodology

The Financial Action Task Force (FATF) is shifting towards more of an emphasis on effectiveness, not just technical compliance. In the next mutual evaluation, FATF will separately assess supervision of:

• financial institutions

• virtual asset service providers

• non-financial businesses and professions such as lawyers and accountants

 

This means the quality of UK supervision, not just activity levels, will be under the microscope. HM Treasury is therefore increasing the metrics supervisors must report, adding new data points this year on:

• persistent non-compliance

• firms needing higher risk categorisation

• SAR quality assessments

These additions aim to demonstrate to FATF that UK supervisors can measure and improve their own effectiveness.

 

Major reforms to the supervision model are coming

The government has indicated that the FCA will become the AML/CTF supervisor for all professional services firms, replacing the Professional Body Supervisors (PBSs) and taking over AML supervision of ASPs and TCSPs currently supervised by HMRC.

 

This will fundamentally restructure how AML oversight works across the UK.

 

The report signals heightened expectations of risk-based, data-led supervision

Across supervisors, including the FCA, HMRC, and Gambling Commission, the report shows a shift to analytics-driven approaches and sector-specific risk targeting. Supervisors are expected to:

• use more granular risk data

• target high-risk firms more aggressively

• demonstrate improvement in compliance outcomes

This means firms should expect more focused, more frequent, and more intelligent supervision.

Implications for Different Types of Organisations

 

Financial services (FCA-regulated firms)

Expect sharper, more data-driven supervision. The FCA’s use of analytics and AI means:

• firms with anomalous data will be quickly flagged

• poor AML governance will surface earlier

• scrutineers will increasingly expect evidence of ML/TF risk intelligence, not just policies

Accountants, lawyers, and professional service firms

The biggest shift: The FCA is taking over your AML supervision. This will bring:

• significantly more consistency

• higher expectations for risk frameworks

• a cultural change from a “supportive PBS model” to “regulatory supervision”

This is the most consequential change to AML supervision in the UK since the 2007 regulations.

 

High-risk sectors supervised by HMRC

MSBs, TCSPs, estate agents, art market participants, and others should anticipate:

• continued targeted visits

• increased registrations refusals

• closer review of BOOMs and fit-and-proper checks

HMRC’s risk-based approach increasingly relies on intelligence-sharing with NCA, OPBAS, and Companies House.

 

What should firms do now?

1. Strengthen risk assessments and risk-based CDD

Supervisors are explicitly looking for risk differentiation and justification of decisions, not template-style documents.

2. Prepare for more granular data requests

Expect supervisors to ask:

• why certain client segments are higher risk

• how transaction monitoring scenarios were calibrated

• how SARs were quality assured

3. If you’ve been non-compliant before, assume follow-up scrutiny

With new metrics tracking persistent failures, unresolved issues will be prioritised.

4. Professional services firms should prepare for FCA-style supervision

This means:

• more structured governance

• evidence-based risk frameworks

• data-driven AML oversight

• faster, more intrusive enforcement

 

The 2024–25 HM Treasury AML/CTF Supervision Report is essentially a blueprint for where UK supervision is heading. It will be more centralised, more data-led, more effectiveness-focused and less tolerant of weak compliance.

 

By investing in risk-based decision-making, improving data quality and professionalising their AML frameworks, most firms will be well positioned for the changes and for the UK’s upcoming FATF assessment.

 

Appendix: Key highlights from the 2024–25 supervision report

The most important findings from the report:

 

1. Supervisory Activity: 8% of the UK’s supervised population saw direct intervention

Supervisors conducted 7,991 desk-based reviews (DBRs) and onsite visits, equivalent to 8% of all supervised firms, down from 10% last year but still above 2022–23 levels

Why it matters

The decrease likely reflects supervisors’ move toward targeted, risk-based engagement rather than broad blanket reviews. This aligns with FATF expectations but means higher-risk firms will feel disproportionate scrutiny.

2. Supervisors are spending more, even with fewer staff

Across all supervisors:

• 693 FTE staff dedicated to AML supervision (down from 708)

• £57 million expenditure (a 24% increase from last year’s £46m)
  
  24-25_Annual_Report_HMTreasuryA…

Why it matters

Expect increased supervisory intensity even without workforce expansion because supervisors are leaning heavily into technology, analytics, and intelligence.

3. New metrics reveal persistent weaknesses in compliance

For the first time, supervisors reported:

• 15% of businesses previously found non-compliant remained non-compliant

• 353 businesses required a higher risk categorisation after assessment

Why it matters

Firms with recurring compliance failures will be more easily identified and prioritised for enforcement. Expect shorter tolerance for repeat issues.

4. Suspicious Activity Reports (SARs) are under more scrutiny

In 2024 – 25:

• 1,412 firms were asked to share SARs

• 798 SARs were assessed

• 62 were judged inadequate

Why it matters

The quality, not just volume, of SARs is becoming a measurable compliance outcome. Supervisors will increasingly challenge poor quality or boilerplate SARs.

5. FCA: A leap forward in data-led supervision

The FCA’s supervisory approach is increasingly advanced and analytics-driven, including:

• MAPP (Modular Assessment Proactive Programme) for multi-firm risk reviews

• PAMLP, detecting outliers using REP-CRIM and internal datasets

• Focused Supervisory Interventions (FSIs), with tailored follow-up
  

The FCA’s compliance outcomes:

• 51% compliant

• 41% generally compliant

• 8% non-compliant

Why it matters

Financial services firms must prepare for:

• shorter notice

• more data-driven inspections

• fewer “light-touch” visits

The FCA is building the infrastructure to become the UK’s dominant AML supervisor across all professional services sectors.

6. HMRC: High levels of non-compliance persist

HMRC’s findings were more severe:

• 60% of assessed firms were non-compliant

• Only 19% fully compliant
  

High-risk sectors supervised by HMRC such as TCSPs and MSBs remain especially  challenging.

Why it matters

Sectors supervised by HMRC should expect:

• more intrusive onsite visits

• expansion of intelligence-led “days of action” (45 MSB operations this year)

7. Gambling commission: High non-compliance

The Gambling Commission found:

• 40% non-compliant

• 41% generally compliant

• 19% compliant
  

 

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