UK publishes draft to strengthen anti-money laundering rules targeting virtual asset firms

The UK Treasury has unveiled a draft revision of anti-money laundering (AML) regulations to further tighten supervision of virtual asset (cryptocurrency) operators. The move is intended to plug institutional gaps and respond to evolving risks as financial crime risks grow.

According to The Block on the 4th (local time), the Treasury said the aim of the revision is "to robustly tackle financial crime while building a proportionate, risk-based regime the industry can accept." The draft includes measures such as using digital identity verification and improving sector-specific AML and counter-terrorist financing (CTF) guidance.

This announcement was prepared based on a public consultation conducted last year. According to the "Money laundering and terrorist financing risk assessment report" published by the UK government in July, the UK remains highly exposed to risk due to its open and large-scale economy.

Financial crime risk in the UK is evident in statistics. According to the Home Office's "2024 Economic Crime Survey", about 2% (33,500) of UK businesses experienced money laundering incidents or suspicions last year. Also, more than 43% of fraud was cyber-based and linked to overseas organizations.

Virtual assets are cited as a particularly worrying area. The Financial Conduct Authority's (FCA) 2024 survey found that 12% of UK adults hold virtual assets, and law enforcement vigilance is increasing given a rise in laundering cases via overseas service providers.

The draft centers on strengthening supervision of virtual asset firms. The FCA has introduced a "fit and proper" assessment instead of the existing "beneficial owner" screening, expanding oversight to cover complex governance structures. It also lowered the reporting threshold for share acquisitions from 25% to 10%, requiring mandatory reporting to the FCA when a stake of 10% or more is acquired or when significant influence over management is exercised. Other proposed amendments include customer due diligence, trust registration, regulation of interbank transactions, and changing the currency unit for money laundering risk thresholds from euros to pound sterling.

The Treasury will collect feedback on this draft until September 30 and plans to finalize the proposal and present it to Parliament in early 2026.