UK Enhances AML Measures in Preparation for FATF Evaluation

The United Kingdom is taking steps to strengthen its anti-money laundering (AML) framework as it gears up for its next Financial Action Task Force (FATF) assessment, according to the 2023-24 AML Supervision Report.

Released by HM Treasury (HMRC), the report outlines the efforts of the UK’s 25 AML and counter-terrorist financing (CTF) supervisors to enhance regulatory standards. It details various measures implemented to improve supervision and ensure a favorable outcome in the FATF evaluation.

“The FATF has begun its fifth round of assessments. As part of this, the UK will undergo an in-depth evaluation, resulting in a new Mutual Evaluation Review,” the report stated.

The UK’s evaluation is set to be published in 2028 and will measure both technical compliance with FATF’s 40 Recommendations and the effectiveness of the country’s AML, CTF, and counter-proliferation financing (CPF) frameworks.

As part of its supervisory enhancements, HM Treasury introduced a set of new performance metrics during the 2023-24 reporting period. These metrics, designed with input from AML supervisors and the National Crime Agency, are aligned with FATF’s methodology to ensure consistency in assessment.

“This reflected our commitment to developing a framework to better evaluate the effectiveness of AML/CTF supervision,” the report noted. “The additional metrics will include data required for the UK’s next Mutual Evaluation Report (MER).”

FATF has updated its assessment criteria to place a stronger emphasis on effectiveness, risk, and contextual factors. The upcoming evaluation will differentiate between financial institutions and virtual asset service providers on one side and non-financial businesses and professions on the other.

“This will provide a clearer overview of the level of effectiveness of supervision in these distinct areas, and stronger and more targeted recommendations for improvement,” the report added.

HM Treasury continues to rely on FATF reports to assess sector-specific risks, incorporating findings from investigations and leveraging insights from experienced personnel.

“As a leading FATF member, the government welcomes a renewed international focus on supervision effectiveness and expects supervisors to demonstrate full compliance with required standards,” the report said.