Russia’s full-scale invasion of Ukraine in 2022 sparked a well overdue and welcome spate of activity to address the UK’s longstanding tolerance towards dirty money. Financial sanctions, new enforcement units, and real efforts to prevent rampant abuse of the UK’s corporate transparency register all followed in short order.
There were hopes a new government would maintain this momentum and further “clamp down” on dirty money. Indeed, Labour’s 2024 manifesto committed to “work with allies and international financial centres to tackle corruption and money laundering.”
But despite some positive noises, there has been little implementation. Meanwhile, deregulatory measures combined with under-resourcing of law enforcement agencies risk undermining the fight against dirty money and letting professional enablers of money laundering off the hook.
So what is the record of the Labour government so far on tackling illicit finance after two years in office?
And what does the new Burnham government need to do to show it is serious about ensuring that illicit finance and economic crime do not undermine its ambitious agenda to get ‘good growth in every postcode’?
Lots of planning, less action
There was no absence of fighting talk about dirty money in the Labour government’s first two years in office. This included:
- strategies on anti-corruption andfraud, with another one forthcoming on anti-money laundering and asset recovery, together with a third Economic Crime Plan linking all three strategies together;
- consultations on improving economic crime information sharing and reforming anti-money laundering (AML) supervision, and
- a planned summit on illicit finance (pushed back from June to December 2026).
But beyond some targeted interventions like anti-corruption sanctionspackages, this tough talk has papered over a distinct lack of action or sustained increase in enforcement resourcing.
A notable exception is the introduction of legislation this year to make the Financial Conduct Authority (FCA) the AML supervisor for lawyers, accountants, and corporate service providers, a reform that promises to fix long-standing failings in AML supervision for these sectors. But with the transition period set to last until at least late 2028, there are worrying signs that the government has not fully appreciated the risks inherent in such a major shake-up of AML supervision.
Has the government put its money where its mouth is on economic crime?
Piecemeal handouts hold back progress
While well-written strategies and punchy rhetoric have set a positive tone, what really matters when it comes to making the UK a hostile environment for dirty money is strong enforcement. And here, a stretched and creaking criminal justice system and continued under-resourcing of law enforcement mean the last couple of years have been more about style, less about substance.
While it would be unrealistic to expect the government to resolve long-standing resourcing challenges in just two years, limited funding uplifts suggest the government has not seen resourcing enforcement against economic crime as a priority.
We have seen welcome, but ultimately small and piecemeal, funding increases for some agencies. This includes the Serious Fraud Office (which crucially now gets more funding upfront, an important change from previous arrangements), £15 million in seed funding for the new Domestic Corruption Unit, targeted top-ups for various agencies through the Economic CrimeLevy and for tackling high street money laundering, and £30 million to set up the Online Crime Centre designed to improve the response to consumer fraud.
This is all much needed funding, but small change compared to the £100 billion in dirty money the NCA estimates could be realistically laundered each year through the UK, and the £219 billion in annual losses to the UK through fraud.
And elsewhere, major resourcing challenges risk pushing key economic crime fighting units to breaking point. For example, the nine Regional Organised Crime Units (ROCUs) – crack police units that play a vital role in tackling money laundering across England and Wales – face a 25% budget cut on already tight funding.
Political pressures dictate – and divert – resourcing
Resourcing challenges are particularly acute at the National Crime Agency (NCA). A recent report by the NCA’s official watchdog – HM Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) – found that the agency does not have “enough resources” to meet government demands and branded its IT infrastructure “not fit for purpose”.
In the context of successive government failures to properly resource the agency, the purported top-up in 2024-25 to the NCA’s overall budget is a sticking plaster masking chronic problems with the way the agency is funded. HMICFRS found that the NCA still lacks a medium term financial strategy, with its current funding structure constraining its ability to “align its strategic and medium-term financial planning.”
In addition, political pressure to focus on tackling organised immigration crime has diverted core NCA staff from units set up to tackle economic crime. For example:
- The Combatting Kleptocracy Cell – set up with much fanfare as the UK’s flagship enforcement unit to tackle hostile state threats and oligarchs following Russia’s full-scale invasion of Ukraine – has been operating at 50% capacity.
- The mostly aid-funded International Corruption Unit suffered a major capacity blow after 15 staff members were surged to the NCA’s Organised Immigration Team in January 2025.
- For much of the period between 2020 and 2025, the NCA’s Bribery and Corruption Intelligence Unit – which provides crucial leads for the ICU – was working with less than half the required staff.
- Officials concluded it was “unrealistic” to increase the ICU’s budget by 25% due to “significant resourcing constraints” and recruitment and retention challenges in the face of “competing law enforcement priorities” at the NCA.
A divisive two-tier pay structure and a lack of pay progression which traps officers on their lowest pay rung have long been major factors in the agency’s persistent struggles to recruit and retain staff. The NCA now faces potential equal pay claims of more than £338 million due to its pay structures,a 68% increase since our 2024 report sounded the alarm on the potential costs to the NCA of not implementing pay reform.
The prospect of the NCA merging with the new National Police Service (NPS), as announced in the Police Reform White paper in January this year, is making recruitment even harder with the lack of clarity for new joiners about the terms and conditions they are signing up to. With the NPS set to take years to deliver, it is crucial the government gets pay issues right with the NCA urgently, so it has a specialised and motivated force ready to merge into the new service.
Pursuing short-term growth at any cost?
Along with serious constraints on enforcement resourcing, the positive talk on tackling dirty money risks being undercut by short-sighted efforts to ease regulatory ‘burdens’, encourage risk-taking and increase investment into the UK at all costs in order to achieve economic growth.
This points to lack of cross-government coordination that is likely to create a more permissive environment for dirty money – undermining rather than building the clean foundations needed for growth. As the UK’s Anti-Corruption Champion Baroness Margaret Hodge has said, “you’ll never get sustainable growth on the back of dirty money, because you lose your reputation”.
Lowering standards for Senior Managers
One of the most damaging deregulatory measures pushed by the Starmer administration threatens to water down the Senior Managers and Certification Regime (SM&CR). Established after the 2008 financial crisis to make senior managers more personally accountable for failings on their watch, this framework has been crucial for driving up standards across the financial services sector.
An official evaluation in 2023 found it had ensured senior managers were taking more responsibility, with 95% of firms surveyed saying the regime had had a positive impact on individual behaviour. While some of the incoming changes are relatively minor and sensible, others amount to a substantial downgrading of the regime.
This sits uneasily with the FCA’s regulatory role to protect consumers and tackle financial crime. As one white-collar crime lawyer has commented, the major changes to the SM&CR “call into question whether the regulator is pursuing economic growth at the expense of its broader regulatory objectives.” This comes as the FCA’s latest annual report revealed a deterioration in its “market cleanliness” data, with sharp increases in abnormal trading ahead of sensitive market announcements and a doubling of investment fraud.
Meanwhile the FCA’s chief executive has repeatedly called for the government to state how its push for economic growth sits alongside financial crime risks. Far from securing the certainty needed for growth, the deregulatory drive is distracting the regulator from its core missions of protecting consumers and ensuring financial integrity..
It also sends the wrong signal at a time when the regulator should be doubling down on enforcing the SM&CR regime – to prevent money laundering, market abuse and greenwashing. To date the track record of enforcement under the SM&CR has been very poor, with just 1 investigation opened in 2024 compared to 11 in 2023 and 12 in 2022.
Our research has shown that the SM&CR has never been used to hold senior individuals to account for major money laundering failures. Instead of rolling it back, there are strong arguments for it to be enforced more proactively when senior managers break the rules and rolled out across the regulated sector more widely.
Relaxing anti-money laundering rules
The government has alsointroduced changes to the money laundering regulations that seek to focus compliance on the highest harm activity. Some tweaks tightening up the rules are welcome but without robust supervision others could make the UK more vulnerable to dirty money.
Two of the most significant changes mean that firms no longer have to conduct enhanced due diligence (EDD) on all ‘complex or unusually large’ transactions, with this requirement being watered down to apply to only those considered ‘unusually complex’ or ‘unusually large’.
In addition, requirements to do EDD on all transactions involving countries on the Financial Action Task Force’s (FATF) grey list have been scrapped, with these tighter checks now only mandated in relation to countries on FATF’sblack list.
These changes are designed to help regulated firms focus resources on genuinely high-risk activity. But there is a real risk that some unscrupulous or less conscientious firms exploit these changes to cut costs by failing to conduct EDD on risky transactions. This would be disastrous for the long-term health of the UK economy by allowing more criminal funds into the financial system.
Risking complacency in AML supervisory reform
With the FCA set to take over AML supervision of lawyers, accountants and company service providers on top of its AML supervision of the financial sector, there are real questions over whether it can deliver robust AML supervision in the face of governmentpressure to deregulate.
And while it is welcome that the government has now introduced the necessary primary legislation to make the FCA the new professional services supervisor through the Financial Services and Markets Bill 2026, there are signs that the government does not fully appreciate the real risk that the quality of AML supervision significantly deteriorates during the extended transition period.
Policing the transition
One key oversight concerns the powers of the FCA-housed Office for Professional Body AML Supervision (OPBAS) to police the transition. In its November 2025 consultation, the government noted that OPBAS – which oversees the 22 non-statutory supervisors for the legal and accountancy sectors (the ‘PBSs’) – may need “additional powers”such as a fining power or the ability to call out failing supervisors in its reports.
This comes after a recent OPBAS’ report found that “continued failures…call into question the consistency and effectiveness of AML supervision” by the PBSs, adding that “some PBSs aren’t undertaking consistent, proportionate and sufficiently dissuasive disciplinary measures in circumstances where it would be warranted and justifiable”.
OPBAS’ stark findings tally with data in Spotlight’s AML tracker. For instance, the Council for Licensed Conveyancers issued 22 times more informal actions than formal actions over the last seven years despite an average of 87% of the firms it reviewed over this time not being fully compliant with the MLRs. This is alarming given the UK property sector poses a notoriouslyhigh risk of money laundering.
Despite the clear risks that supervisors begin to wind down their supervisory work before the transition is complete, the government has opted to give OPBAS no new enforcement powers. This risks weakening the UK’s defences against dirty money by letting professional body supervisors who fail to supervise their firms properly for money laundering off the hook during the transition period.
FCA access to legally privileged material
Even if the transition goes entirely to plan, the failure to confirm that the FCA will have powers to view materials protected by Legal Professional Privilege (LPP) risks undermining its ability to supervise the legal sector effectively. While LPP undoubtedly has a vital role to play as a fundamental right in securing access to justice, the unique privileges to exercise LPP that lawyers are given as members of a public profession mean that their regulators – acting in the public interest – must have unique powers to ensure those privileges are not abused.
As noted recently by the Solicitors Regulation Authority (SRA), whose AML supervision responsibilities the FCA will inherit: “if the SRA cannot consider… [LPP] material, there is a risk that serious wrongdoing on the part of solicitors may be occluded from regulatory oversight”.
As with the SRA, if the FCA lacks powers to inspect privileged material, it will be very difficult for it to form a comprehensive assessment of the adequacy of AML due diligence conducted by lawyers, and it will be fundamentally constrained and unable to effectively supervise the legal sector for compliance with AML rules.
Bringing golden visas back from the dead?
Another risky measure on the cards that would seek to attract investment into the UK is the mooted plan to reintroduce an investor visa scheme – this time as an invite-only route for wealthy individuals to get three years of residency in exchange for investing at least £5 million.
In 2022, just after Russia invaded Ukraine, the last Conservative government scrapped the old golden visa regime on national security grounds. As well as being highly vulnerable to abuse by corrupt actors, both official and academic research had long criticised the regime for failing to provide economic benefit to taxpayers.
A government review found that the risks of corruption and organised crime in the route could not be mitigated effectively. With growing recognition of the illicit finance risks in these schemes, the latest EU AML Directive adds “investment migration operators” to the list of entities that must comply with AML rules.
It is not clear how the government intends to implement a new regime without those dirty money risks resurfacing. The latest proposal to create an ‘invite only’ golden visa – seemingly being pushed by firms which would directly benefit from such a scheme – would also be likely to face serious risks of cronyism.
Any rebranded golden visa scheme by the UK would also risk backsliding elsewhere. After the UK and Australia closed their investor visa regimes in early 2022, some EU members including Spain and Ireland followed suit. A new UK golden visa could undermine this progress and lead to a race to the bottom on providing attractive residency offers for wealthy investors.
Letting complex money laundering fall by the way side
While the government has prioritised tackling organised immigration crime and high street money laundering, there has been little action against the most complex and sophisticated money laundering that undermines the UK’s reputation as a global financial centre. The deregulatory drive, combined with resourcing constraints on law enforcement agencies, risks letting the professionals who wittingly and unwittingly enable complex, large-scale money laundering schemes off the hook.
This gap around complex money laundering is not immediately apparent from the latest statistics on economic crime. Our enforcement tracker – which visualises this hard-to-find data – shows that money laundering prosecutions increased by 37% in 2024/25 compared to the previous year, and overall fraud prosecutions increased for a second year running.
However, beyond a handful of exceptions such as the NCA’s Operation Destabilise, it is almost certain that the increase in money laundering prosecutions has resulted from agencies targeting lower hanging fruit like money mules and high street money launderers, rather than complex money laundering carried out by white-collar professionals like lawyers, accountants and estate agents who act as lynchpins for laundering vast sums of dirty money.
Professional enablers escape the net
There is no doubt that investigating and prosecuting white-collar criminals is tough: these are sophisticated professionals who know how to cover their tracks and have deep pockets to fight any law enforcement action.
But in spite of strong rhetoric from senior politicians, promised change under the 2024-2026 cross-system professional enablers strategy, and priority commitments in the Anti-Corruption Strategy, there has been little tangible action against enablers. Beyond a couple of sanctions designations, there has been very little publicly visible evidence that professional enablers of money laundering are being held to account.
The cross-system professional enablers strategy aimed to “galvanise a whole system response to deliver a step-change in reducing the threat posed by professional enablers”. But far from driving up deterrence, it has failed to up the ante on holding professional enablers to account. Despite no shortage of money laundering scandals, high-profile cases in the last two years featuring criminal enforcement against white-collar enablers have been few and far between.
This is a long-standing issue. Convictions of regulated professionals for failing to disclose knowledge or suspicions of money laundering by their clients have fallen by 100% since 2013-14 with just 2 convictions in the last seven years. And there has still only been one corporate criminal conviction of a bank for money laundering in the UK (back in 2021).
Nor has there been strong evidence of proactive collaboration between regulators and law enforcement agencies on enablers, which was meant to be a major plank of the strategy. Action may have taken place behind the scenes. But the lack of public, visible enforcement action against professional enablers means it has provided an extremely limited deterrent effect.
What does the new Burnham government need to do now?
With a major FATF review of the UK’s record on tackling money laundering around the corner, the UK urgently needs to accelerate delivery of its many stated commitments and promised plans to tackle illicit finance. So, what should the Burnham administration prioritise to walk the talk on tackling dirty money (see our other blog to read these recommendations in more detail)?
First, champion ambitious implementation of the new Anti-Corruption Strategy. While it contains lots of positive commitments, delivering the strategy will require prioritisation and coordination across government.
Second, step up UK leadership on corruption through the Illicit Finance Summit in December. The summit is a major opportunity to highlight the UK’s commitment to tackling dirty money and fostering financial integrity on the global stage, bolstering the UK’s reputation as a safe place to do business.
Third, crack down on the professional enablers of dirty money. This means showing teeth through strong criminal enforcement, using the NCA’s new enablers coordinator to drive forward casework.
Fourth, remove criminal justice barriers to tackling complex dirty money cases. This will require sustained resourcing and a focus on building greater specialism among investigators, prosecutors and judges in order to handle high-value and high-harm cases, rather than settling for low-hanging fruit.
Finally, ramp up the recovery and reinvestment of criminal assets through creating an economic crime fighting fund. With public finances strained, reinvesting a greater share of fines and recovered assets back into law enforcement would provide a badly needed resourcing boost at the expense of criminals, not taxpayers.
The previous administration talked a good game on tackling dirty money. But under-resourcing of law enforcement coupled with deregulatory measures has made the UK more vulnerable to complex money laundering that fuels crimes harming communities across the UK and overseas. The new administration now has a chance to turn words into action by taking the fight to dirty money at home and abroad, and in doing so restore public trust by showing that crime does not pay.
