• Treasury wants banks and City firms to provide evidence that UK AML controls deliver measurable results
• Case studies will support preparations for the UK’s 2027 FATF evaluation
• Firms are being asked for examples of rejecting or exiting high-risk clients
• The NCA estimates £100 billion is laundered through or within the UK annually
• Moody’s has questioned how effectively existing controls reduce financial crime risk
• AI-enabled fraud and cryptocurrency are adding to emerging financial crime threats

The UK government is asking banks, lawyers and other financial services firms to demonstrate that the country’s anti-money laundering controls are producing tangible results as it prepares for a critical international assessment of its defenses against financial crime.

The Treasury has issued a call for real-world case studies showing how firms have successfully prevented money laundering, terrorist financing and sanctions breaches, ahead of the UK’s next evaluation by the Financial Action Task Force in 2027.

The government said it wants examples with “clear, demonstrable results” illustrating how the UK’s AML, counter-terrorist financing and sanctions frameworks operate effectively in practice.

Evidence is being gathered ahead of an October submission to FATF, whose assessment team is expected to conduct an on-the-ground review of the UK next summer.

The exercise comes as authorities face pressure to demonstrate that extensive spending on compliance, supervision and enforcement is translating into meaningful reductions in financial crime.

The National Crime Agency estimated last year that £100 billion is laundered through or within the UK annually.

Financial and legal services can be exploited by criminals involved in activities including fraud, human trafficking, drug trafficking and other forms of organized crime.

The UK legal sector has also been classified as high risk in every national risk assessment of money laundering and terrorist financing since 2017.

Rating agency Moody’s warned earlier this year that scrutiny of the UK’s AML regime was intensifying ahead of the FATF review.

“Billions are spent each year in the UK on supervision with hundreds of firms refused entry to the financial system following due diligence, yet an estimated £100bn is still laundered annually,” Moody’s said.

It added that FATF examiners could question how effectively UK controls, intelligence and enforcement are reducing that underlying risk and how rapidly they are producing results.

The challenge is being complicated by evolving financial crime threats, including AI-enabled investment fraud and increasing use of cryptocurrencies, which can make identifying the origins of transactions more difficult.

The Treasury is asking financial services firms to submit cases dating from 2022 demonstrating how they rejected or ended relationships with potentially high-risk customers.

Authorities also want examples where private-sector interventions contributed to government investigations or prosecutions.

Companies have additionally been asked to identify cases where financial crime warning signs discovered within customer profiles led them to reconsider the types of clients they were prepared to accept.

A Treasury spokesperson said the government was taking “firm and coordinated action” alongside industry to combat economic crime.

“We have introduced new strategies, enhanced enforcement capabilities and increased funding designed to disrupt those seeking to abuse the UK economy,” the spokesperson said.

The government said engagement with industry was a normal part of preparing for the FATF assessment.

However, the evaluation will ultimately test more than whether banks and other regulated firms have established extensive AML policies and compliance processes.

With an estimated £100 billion still being laundered annually, the UK will face the more difficult challenge of demonstrating that its financial crime framework is materially reducing illicit activity.