The Treasury has published the draft Money Laundering and Terrorist Financing (Amendment) Regulations 2026 (the “2026 Regulations”), introducing a series of targeted but significant amendments to the UK Money Laundering Regulations (the “MLRs”).
The changes are wide-ranging, but the most consequential relate to the circumstances in which Enhanced Due Diligence ("EDD") needs to be applied.
Senior legal, compliance, and financial crime professionals should take careful note of the new obligations and consider their practical impact.
Enhanced Due Diligence: a refined approach
The 2026 Regulations tighten the EDD triggers under Regulation 33 of the MLRs.
Notably, the trigger for EDD in relation to transactions has been refined: the previous reference to “complex or unusually large” transactions is replaced with “unusually complex or unusually large in each case given the nature of the transaction”.
This subtle but important and welcome change narrows the requirement for EDD in relation to complex and large transactions by allowing firms to determine whether complexity or size is “unusual” with reference to the context in which the transaction takes place.
Firms are currently required to apply EDD to transactions or customers involving “high-risk third countries”, defined in the MLRs as any country on either FATF’s “increased monitoring” or “call for action” list.
The 2026 Regulations narrow this to only countries on the “call for action” list. At the time of writing, the “call for action” list consists of Iran, North Korea, and Myanmar only.
Although the narrower list of defined high-risk jurisdictions will reduce number of cases in which EDD is mandatory under Regulation 33(1)(b), it is expected that many firms – particularly larger, multinational firms – will, consistent with a risk-based approach, and Group policies, continue to apply some measure of EDD to customers connected to grey list countries.
Other key amendments
Sterling Thresholds: All monetary thresholds previously denominated in euros in the MLRs are now expressed in sterling, generally on a 1:1 basis (e.g. €10,000 becomes £10,000).
Off-the-Shelf Companies: The sale of “off-the-shelf” companies is explicitly brought within the scope of customer due diligence ("CDD") requirements. Trust or company service providers must now treat such sales as a business relationship, triggering full CDD obligations.
FCA reporting duties: There is a new obligation requiring authorised persons to report to the FCA within 30 days any inaccuracy in, or material change affecting, information provided under Regulation 23 of the MLRs.
Pooled Client Accounts: Firms providing pooled accounts must now take reasonable measures to understand the purpose and intended use of the account, assess the customer’s risk profile, and maintain appropriate records. Information on the identity of the underlying customers must be made available on request to the account holder.
Insolvent Bank Customers: The timing of verification for insolvent bank customers is relaxed, allowing accounts to be opened and transactions to proceed before full due diligence is completed, subject to certain safeguards.
Trust Registration: The 2026 Regulations expand the categories of trusts required to register with the Trust Registration Service, bringing additional types of trusts within scope while introducing new exclusions for trusts that are low-value, low risk, or trusts related to estate administration.
Sovereign Wealth Funds: New exemptions are introduced for sovereign wealth funds operated by central banks and other specified public bodies, reflecting their unique status and risk profile.
Timing
A draft statutory instrument was laid before Parliament on 26 March 2026. The 2026 Regulations are expected to enter into force in the summer of 2026.
