UK Consultation Outcome for MLRs (July 2025)

Tom Hughes explains the UK Consultation Outcome for MLRs

Date

Tom Hughes, Senior Associate, Teal Compliance. Tom’s specialisms are AML & Cryptocurrency

Since running from March to June 2024, HM Treasury’s consultation titled “Improving the effectiveness of the Money Laundering Regulations” has now reached its conclusion. The official outcome, published on 17 July 2025, sets out targeted reforms to sharpen AML compliance and close existing loopholes (GOV.UK).

AML Risk Assessment and Audit

Consultation Focus: Four Core Areas

The consultation covered:

  1. Making Customer Due Diligence (CDD) more proportionate and effective
  2. Strengthening system coordination (supervisor collaboration)
  3. Clarifying the scope of the MLRs, especially for non-financial sectors
  4. Reforming Trust Registration Service and crypto‑asset regulation (GOV.UK)

These themes reflect earlier findings in the 2022 AML/CTF Review and the Economic Crime Plan 2023–26.

Key Decisions from the July 2025 Outcome

HM Treasury confirms it will proceed with amending the MLRs, focusing on:

  • Enhanced Due Diligence for complex or high‑risk transactions and countries
  • Mandatory CDD on pooled client accounts
  • New rules around onboarding during bank insolvency and improved info-sharing between supervisors (including Companies House, HMRC) (GOV.UK)
  • Registration requirements for crypto-asset service providers and Trust Registration Service updates (GOV.UK

A draft Statutory Instrument will be released in coming months for technical feedback, with parliamentary approval expected late 2025 (Global Regulation Tomorrow).

Sector Spotlight: Law, Real Estate & Non-Financial Firms

The consultation revealed that 96% of property-sector respondents wanted clearer obligations on CDD in real estate (Propertymark). Similarly, law firms cited confusion over when CDD is required and how to assess sources of funds.

HM Treasury is responding with sector-specific guidance clarifying:

  • When a “business relationship” triggers CDD
  • How to verify beneficial ownership
  • Rules for pooled client accounts in conveyancing and legal work (Propertymark, GOV.UK)

     

The goal: a proportionate, risk-based approach that avoids unnecessary burden while strengthening compliance (Law Society).

Why This Matters to Teal Compliance Clients

  1. Clearer, more targeted rules reduce uncertainty, especially for non-financial services.
  2. Pooled client account checks are becoming a legal expectation, not optional.
  3. Enhanced due diligence on high-risk clients helps protect your firm and community.
  4. Improved supervisory coordination means smoother compliance and reduced oversight gaps.
  5. Upcoming crypto and trust registration updates underscore the need for broader AML awareness.

These changes aren’t isolated to the UK, they mirror international AML trends. For Teal clients operating across borders, staying ahead is smart business.

What’s Coming Next & How Teal Can Help

  • Draft Statutory Instrument to review (late 2025)
  • New guidance for legal and real estate sectors
  • Likely implementation in early 2026

     

Teal Compliance is ready to help with:

  • AML risk assessments and gap analysis
  • CDD/EDD process design, including pooled account screening
  • Client onboarding quick-check templates
  • Specialist guidance on crypto and other emerging services, and
  • Policy reviews and staff training

Your Next Steps

  1. Monitor the draft SI (statutory instrument) and prepare to consult
  2. Refresh your CDD/EDD processes now – especially around pooled funds
  3. Update your AML risk profile and anticipate sector-specific guidance

These updates aren’t regulatory hurdles, they’re steps toward stronger, smarter compliance that protects your firm and community.

 

Read the HM Treasury’s full document “Improving the effectiveness of the Money Laundering Regulations” Consultation response

 

Thanks for reading.

Tom

Free Discovery Call with Teal Compliance

More
articles

Testimonial from Right Legal
"We have been using Teal to support our compliance frameworks, and every aspect of our experience with them has been fantastic. From the training to the audits, and especially the ‘Ask Teal’ helpline, nothing is too much trouble, and you get quick support from some of the industry’s best compliance experts. Just having them there to support our continued growth takes a huge weight off my mind. Highly recommend to firms of all size and structure!"
Get in touch
Testimonial from Constantine Law
"We rely on Teal Compliance to provide responsive, practical compliance services to Constantine Law (we do not have an in-house compliance officer/function). I would encourage all solicitor firms without their own resource to engage with Teal: they know what they are doing and they provide peace of mind regarding day-to-day compliance matters as well as responses to unforeseen (tricky) compliance matters. They have become an indispensable partner to Constantine Law in our growth journey."
Get in touch
Testimonial from Streathers Solicitors
"We have worked with Teal for several years. They have provided us with AML training and also helped us put together our firm-wide AML risk assessment and our updated AML policy, along with assisting us with various issues as and when they arose. We have always found them to be very helpful, friendly, responsive and knowledgeable, and are happy to recommend them."
Get in touch
Testimonial from Streathers Solicitors
"We have had a relationship with Teal for a number of years and they have provided a valuable resource to our compliance team. Teal combine the delivery of a personal and friendly service with city level expertise."
Get in touch