The Home Office has published the fourth National Risk Assessment, setting out the key money laundering and terrorist financing risks for the UK.
The NRA identifies the following key risk areas:
- fraud;
- sanctions evasion;
- acquisitive crime;
- drugs;
- cybercrime;
- organised immigration crime
- tax evasion;
- modern slavery; and
- human trafficking.
The NRA notes that the increasing adoption of new financial technologies and frameworks, such as electronic money institutions (EMIs), payment service providers (PSPs), and cryptoassets, has altered the UK’s risk profile, facilitating the concealment of illicit activities. The outsourcing of AML compliance functions to third-party providers by EMIs and PSPs can also create vulnerabilities in control frameworks, with EMIs and PSPs increasingly targeted for laundering criminal funds. Pre-paid cards and virtual IBANs also pose high risks due to their ability to store and move value easily, making them vulnerable to the placement of criminal funds. The terrorist financing risk of EMIs and PSPs has increased from medium to high, influenced by their cross-border nature and exposure to high-risk jurisdictions.
Since the third NRA in 2020, the Government has introduced the Economic Crime Plan 2023-26, and key legislation such as the Economic Crime and Corporate Transparency Act 2023. The FCA has also increased its focus on financial crime prevention in the EMI and PSP sectors, with a 231% increase in MLR-related supervisory activity.