UK AML: New MLR Statutory Instrument (SI) & What Accountants Need to Know for 2026

Understanding the Money Laundering and Terrorist Financing (Amendment) Regulations 2026

The landscape of anti-money laundering (AML) compliance in the UK is in a constant state of evolution. While the Economic Crime and Corporate Transparency Act (ECCTA) 2023 has brought broader reforms, accountancy practices must now turn their attention to a critical new piece of legislation: the Money Laundering and Terrorist Financing (Amendment) Regulations 2026 (MLRs 2026). This significant UK AML MLR Statutory Instrument was laid before Parliament on 25/26 March 2026, with most of its provisions expected to come into force in late June or early July 2026. [2, 3, 4, 6, 9, 14, 18, 24]

These amendments are not a wholesale rewrite of the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017). Instead, they represent a series of targeted, yet impactful, changes designed to enhance the effectiveness and proportionality of the UK's AML/CTF framework. For UK accountants and bookkeepers, understanding these granular adjustments is crucial for maintaining robust compliance and avoiding regulatory scrutiny. [6, 14]

Enhanced Scrutiny: Navigating New Cryptoasset AML Compliance UK

The MLRs 2026 introduce significant updates to the regulation of cryptoasset businesses, reflecting the growing focus on combating financial crime in the digital asset space. These changes aim to align the MLRs with the broader framework being introduced under the Financial Services and Markets Act 2000 (FSMA) for cryptoassets. [2, 5]

Key amendments include new enhanced customer due diligence (EDD) requirements specifically for cryptoasset exchange providers and custodian wallet providers. This indicates a heightened regulatory concern around crypto-enabled financial crime risks. While some of the more extensive crypto-specific measures, such as mandatory EDD for crypto correspondent relationships, will come into force later (1 February 2027), and a new ownership and control regime will be phased until October 2027, firms dealing with cryptoassets must prepare now. [3, 5, 9, 11]

New EDD Requirements: Cryptoasset exchange providers and custodian wallet providers face stricter EDD obligations. [5]
Aligning with FSMA: The amendments support the transition to the new FSMA cryptoasset regulatory regime. [15]
Phased Implementation: While some changes are imminent, others, like EDD for correspondent relationships, are set for February 2027, and the control regime for October 2027. [3, 9]

Action Item: Firms engaging with cryptoasset businesses, either as clients or in transactions, must review their risk assessments and CDD procedures to ensure they capture the increased risk and new requirements associated with these digital assets. Consider how digital tools can help automate the monitoring of crypto transactions and client profiles.

Bringing 'Off-the-Shelf' Company Sales into AML Scope

A notable clarification in the MLRs 2026 expands the scope of regulated Trust or Company Service Provider (TCSP) activity. The sale of 'off-the-shelf' (or ready-made) companies is now explicitly brought within the ambit of AML obligations. This closes a long-recognised loophole that could be exploited for money laundering and terrorist financing. [2, 3, 4, 7, 9, 16, 21]

Previously, there might have been ambiguity around whether selling a dormant or minimally active company constituted a regulated activity. The new regulations make it clear that TCSPs engaging in such sales must now treat these as business relationships, triggering full customer due diligence (CDD) obligations. This is a crucial update for any accountancy practice involved in company formation or advising clients who purchase such entities. [9, 21]

“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.” [21]

Action Item: If your practice offers company formation services or advises on corporate structures, ensure your internal policies and procedures explicitly cover the full CDD requirements for the sale or acquisition of 'off-the-shelf' companies. This includes verifying the beneficial ownership and purpose of the company from the outset.

Revised Sterling CDD Thresholds for Occasional Transactions

One of the most practical and immediate changes for day-to-day operations is the conversion of all monetary thresholds from euros to sterling. This change aims to align the UK's AML regime with its post-Brexit regulatory independence and ensure consistency with Financial Action Task Force (FATF) standards, while recalibrating thresholds to the UK's specific risk context. [2, 3, 6, 14]

Significantly, the threshold for occasional transactions requiring CDD has been reduced from €1,000 to £800. Other key thresholds have also been converted: for instance, the €10,000 threshold becomes £10,000, and certain €15,000 triggers are now £12,000 or £10,000, depending on the context. This means more transactions will now fall under the scope of CDD. [3, 8, 9, 14, 21]

Occasional Transactions: Reduced from €1,000 to £800. [3, 8, 9, 14]
High-Value Transactions: €10,000 becomes £10,000. [4, 9, 14]
Other Triggers: €15,000 thresholds may become £12,000 or £10,000 depending on the specific use case. [8]

Action Item: Update all client onboarding systems, transaction monitoring rules, and internal policies to reflect these new sterling thresholds immediately upon the regulations coming into force. This requires a systematic review and recalibration of your firm's CDD trigger engines.

Navigating Updated High-Risk Third Country Definitions

The MLRs 2026 also refine the approach to high-risk third countries (HRTCs). Previously, mandatory Enhanced Due Diligence (EDD) was required for jurisdictions on both the FATF's 'Call for Action' list (the 'black list') and its 'Jurisdictions under Increased Monitoring' list (the 'grey list'). Under the new regulations, mandatory EDD will now apply only to countries on the FATF's 'Call for Action' list. [4, 6, 8, 18, 20]

However, it is vital to understand that this does not mean countries on the 'grey list' can be ignored. Being on the 'Increased Monitoring' list still represents a significant risk factor that firms must consider in their overall firm-wide and client-specific risk assessments under Regulation 33(6)(c) of the MLRs 2017. The shift is intended to focus mandatory EDD on the highest-risk jurisdictions, allowing for a more proportionate, risk-based approach elsewhere. [8, 18, 20]

The FATF updates its lists three times a year (February, June, October), so ongoing monitoring of these lists remains essential. The latest FATF plenary on 13 February 2026 saw Kuwait and Papua New Guinea added to the 'grey list'. [17, 22]

Action Item: Review your firm's country-risk frameworks and update your policies to ensure mandatory EDD is applied correctly based on the FATF 'Call for Action' list. Crucially, ensure that countries on the 'Increased Monitoring' list are still factored into your risk assessments, even if they no longer trigger automatic EDD. Digital compliance platforms can help integrate real-time FATF list updates into your risk assessment processes.

Refined EDD Triggers for 'Unusually Complex or Unusually Large' Transactions

The MLRs 2026 introduce a subtle yet significant change to the trigger for Enhanced Due Diligence (EDD) concerning transactions. The previous wording, requiring EDD for transactions that were "complex or unusually large," has been refined. It now specifies EDD for transactions that are "unusually complex or unusually large in each case given the nature of the transaction." [2, 3, 4, 6, 7, 8, 14, 18, 20, 21]

This amendment aims to reduce over-compliance, where firms might have applied EDD to routine but complex transactions. The new wording mandates a more contextual and judgment-driven approach, requiring firms to demonstrate that their EDD decisions are based on what is genuinely 'unusual' within the specific context of the transaction and client relationship. Accountants will need to clearly define what constitutes 'unusually complex' or 'unusually large' within their firm's risk appetite and client base. [6, 8, 14, 21]

Action Item: Update your firm's EDD policies and training materials to reflect this refined trigger. Ensure your compliance team understands the nuance and can apply a risk-based assessment to determine if a transaction is 'unusually' complex or large in its specific context, rather than applying a blanket approach to all complex transactions.

Practical Action Items for UK Accountancy Practices

The MLRs 2026 necessitate a proactive and comprehensive review of your firm's AML compliance framework. Given the expected commencement in late June/early July 2026, time is of the essence. A recent survey revealed that over half of firms were unprepared for these changes, highlighting a significant risk of non-compliance. [24]

Here’s a checklist of immediate steps for your practice:

Conduct a Gap Analysis: Compare your current AML policies, controls, and procedures against the new requirements of the MLRs 2026.
Update Firm-Wide Risk Assessment (FWRA): Ensure your FWRA reflects the updated definitions for cryptoassets, off-the-shelf companies, CDD thresholds, and high-risk third countries.
Revise Policies and Procedures:
- Amend CDD and EDD policies to incorporate the new sterling thresholds and the refined 'unusually complex or unusually large' transaction trigger.
- Update procedures for identifying and onboarding clients involved with cryptoassets.
- Clarify procedures for clients engaged in the sale or purchase of 'off-the-shelf' companies.
- Adjust your country risk assessment framework to align with the revised HRTC definitions, distinguishing between FATF 'black list' and 'grey list' implications.
- Review and update policies regarding pooled client accounts and the Trust Registration Service (TRS) requirements, including new exclusions for low-value trusts. [2, 6, 8, 9, 18, 21]
System Updates: Calibrate your digital onboarding, client due diligence, and transaction monitoring systems to reflect the new sterling thresholds and refined EDD triggers.
Staff Training: Deliver comprehensive training to all relevant staff members (compliance officers, client-facing teams, management) on the specific changes, their implications, and how to implement the revised procedures. Emphasise the move towards a more judgment-driven, risk-based approach.
Documentation: Ensure all changes to policies, procedures, risk assessments, and training are thoroughly documented and readily auditable. Regulators will expect clear evidence of implementation.
Monitor Commencement: Keep a close eye on official government announcements for the precise commencement date of the MLRs 2026.

Leveraging digital compliance tools can significantly streamline these updates, helping practices to quickly adapt to new regulatory requirements, automate checks, and maintain comprehensive audit trails. These tools are invaluable for managing the complexities of AML compliance, including registered office obligations and other compliance requirements.

Conclusion: Proactive Compliance is Key to Navigating UK AML Updates

The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 represent a targeted but impactful set of changes for UK accountancy practices. From the nuanced oversight of cryptoassets and 'off-the-shelf' companies to the practical adjustments of sterling CDD thresholds and high-risk third-country definitions, these updates demand immediate attention. [2, 3, 4, 6, 8, 9, 14, 18, 20, 21]

By conducting thorough gap analyses, updating policies and systems, and investing in continuous staff training, firms can ensure they remain compliant and resilient against the evolving threats of money laundering and terrorist financing. Proactive engagement with these new regulations, supported by efficient digital solutions, is not just about meeting legal obligations; it's about safeguarding your practice and contributing to the integrity of the UK's financial system.