Key Insights from HM Treasury 2023-2024 AML/CTF Supervision Report

In March 2025, HM Treasury published its annual “Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) Supervision Report.” It details the activities of AML/CTF supervisors from 6 April 2023 to 5 April 2024 (2023-2024 Financial year) and provides insights about the UK’s continuous efforts against financial crimes.

HM Treasury is responsible for publishing annual reports related to the supervision of compliance according to regulation 51 of “Money Laundering Regulations (MLRs)” by collecting data from supervisors like FCA and HMRC.

Supervisory and enforcement statistics on public and Professional Body Supervisors are included in the report, along with insights related to shifts in supervisory tasks and fines imposed by supervisors.

The 12th report of HM Treasury has mentioned the government’s commitment to fighting illicit activities such as money laundering and terrorist financing as part of its “Economic Crime Plan 2023-26 (ECP2).”

The UK’s current AML/CTF regime aims to improve the framework’s efficacy by strengthening oversight procedures. Currently, 90,000 plus businesses are being monitored, including financial services, gambling, legal, and accounting, as stated by Emma Reynolds MP, Economic Secretary to the Treasury.

The main highlight of the report is two primary goals of the movement, which are improving the effectiveness of compliance monitoring and AML/CTF regulations.

Strengthening the UK’s AML/CTF Oversight

The government has announced an update about improving the  AML/CTF supervision plan as a primary goal.

• The treasury has already assessed the “effectiveness of the Money Laundering Regulations (MLRs),” and they will publish its findings later this year after getting all necessary feedback from authorities.
• The government is already working on the following “National Risk Assessment (NRA)” related to money laundering and terrorist financing, which is expected to be released in 2025.
• Likewise, another publication is on the way, which is related to an update about “proliferation financing NRA.” This assessment will help to identify risks related to financing the weapons of mass destruction

Assessing and Managing Risk in AML/CTF Supervision

The report has shown more businesses are applying for AML/CTF supervision as

• UK supervisors received a total of “13,058 applications for AML/CTF” in 2023-24, and 954 of them were declined.

While The Financial Conduct Authority (FCA) has observed a decrease in rejection rates as

• In 2021-22, the FCA received 270 AML/CTF supervision applications and rejected 161, which equals approximately 60%.
• In 2023-24, the FCA received 275 applications and rejected 120 — which equals approximately 44%.

On the other hand, Her Majesty’s Revenue and Customs (HMRC) has been rejecting more applications as

• In 2021-22, HMRC rejected 21 out of 13,196 applications, which is approximately 0.1%.
• In 2023-24, HMRC rejected 601 out of 9,893 applications, which equals approximately 6%.

There was a minor drop from the category  of high-risk business has been observed in 2023-24 as

• In 2023-24, approximately 9% of the supervised population was categorized as high-risk, compared to 10% in 2022-23, which shows a 1% drop.

FCA and HMRC Address Compliance Failures

The findings of FCA’s assessments  are

• 7% of firms were fully compliant with AML/CTF laws and regulations
• 19% of firms were compliant but had minor gaps.
• 3% were non-compliant.

HMRC has performed “499 desk-based reviews and 944 onsite visits”. It found 43% were non-compliant

Major identified issues were “inadequate customer due diligence (CDD), poor enhanced due diligence (EDD), and ineffective risk assessments.”

FCA’s action: FCA has sent letters to 171 firms stating “Dear CEO,” mentioning significant AML/CTF regime deficiencies and asking them to improve their strategies.

Enhancing AML Enforcement with Penalties and Fines

FCA and HMRC implemented “fines and penalties” for violations of AML regulations and laws, showing the importance of AML compliance.

FCA has targeted the firms that had difficulties, especially in their risk management related to financial crimes. Crypto firms have been examined under more rigorous supervision and scrutiny by FCA.

It rejected or withdrew 86% of early implications due to observing weak controls.

Read Also:

• Key Developments of FATF Plenary, 21-23 February 2024
• FATF’s First Plenary Under Mexico’s Presidency Focuses on Illicit Financial Flows and Financial Inclusion
• Key Outcomes from the FATF Plenary held on 23-25 October 2024

Improved Coordination and Guidance for AML/CTF Compliance

The report showed the need for collaboration between regulators and private sector organizations to facilitate information sharing to prevent financial crimes. Supervisors provided guidance and data-related training to improve the AML/CTF compliance regime,

As per the report, the government has increased regulations on cryptocurrency firms to ensure they comply with AML/CTF guidelines.

Key Steps and Developments

It is expected that forthcoming changes will make the UK’s position more potent as a global leader by staying consistent and focused on its commitment. It will achieve this goal with improved collaboration with law enforcement and foreign partners to combat financial crimes.