New AML legislation expected June or early July 2026
Following a consultation on improving the effectiveness of the Money Laundering Regulations, the government, on 25 March 2026, laid a new statutory instrument (SI) before Parliament which is being referred to as The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 which can be viewed here.
Timeframes
HM Treasury (HMT) expects that the SI will be considered by the Lords and the Commons for approximately four sitting weeks after being laid which is expected to take us to early June, when the SI will be signed into law. Most of the provisions will come into force 21 days after this date, expected to be late June or early July 2026.
Key takeaways for CLC practices
HMT has produced an explanatory memorandum which we encourage CLC practices to consult. The CLC has reviewed the changes, and this is a summary of the key takeaways from our perspective:
| Area of proposed change in the MLRs | Detail of the changes | Notes | |
| Enhanced due diligence (EDD) on complex transactions (Regulation 33(f)(i) | HM Treasury will amend the MLRs to clarify that EDD is required on “unusually complex” transactions, instead of all “complex” transactions (paragraph 1.49). This narrows the obligation and is being done because of evidence of “overly risk-averse behaviour” particularly in sectors where most transactions could be considered as “complex”. | CLC practices should consider what are “unusually complex” transactions for them (for example this could be conveyancing transactions with multiple giftors etc) and ensure EDD is applied consistently. Bear in mind that the other EDD triggers will remain in place for “unusually large” transactions and transactions that have no “…apparent economic or legal purpose” under Regulation 33(f). | |
| Enhanced due diligence (EDD) on high-risk third countries (HRTCs) | The new legislation will amend the MLRs in respect of HRTCs, mandating EDD only where the relevant transactions or customer relationships involve a person established in* a Call for Action country (blacklist), not an Increased Monitoring List country (grey list). This change has been done because the prior approach (EDD on all countries under increased monitoring) was felt not to be targeted enough and did not focus on the countries that presented the biggest risks to the UK. | CLC practices should bear in mind that the presence of a country on the FATF grey list remains a relevant consideration for risk assessments. In considering whether a country is higher risk, practices/firms are obliged to take into account geographical risk factors which include whether they are recognised as having ineffective systems to counter money laundering or terrorist financing (Regulation 33(6)(c)(i). | |
| Registration requirements for the Trust Registration Service (TRS) | The SI expands the scope of registration on the TRS to include all non-UK trusts that hold an interest in UK land and property acquired before 6 October 2020. This was recognised as a reporting gap by HMT (previously no requirement to register). The other key change under this part is the introduction of a de minimis exemption for certain low risk, low value trusts currently required to register on TRS. | CLC practices involved in trust-related work should consider these changes carefully to ensure that trust registration requirements are complied with. Other changes were also made under this part which are of relevance to CLC practices such as the exclusion of Scottish survivorship destinations trusts from registration on TRS and the removal of Stamp Duty Reserve Tax from the list of “relevant taxes” that trigger registration on the TRS. We recommend that the explanatory memorandum referred to above at paragraph 5.6 is considered in detail. |
* “established in” means for an individual, being resident in that country (not just having been born there) and for a company/legal person, that means being incorporated in or having its principal place of business in that country
Other changes
Another change we want to highlight is the expansion of Trust and Company Service Provider (TCSP) activities to the sale of “off-the-shelf” companies. Whilst CLC practices do not engage in such work, it may be relevant when conducting CDD on clients (for example corporate clients) and is a useful reminder that such companies can be susceptible to being exploited by those seeking to launder money.
Next steps for CLC practices
As a consequence of the above changes, CLC practices must do the following when the new legislation comes into effect in late June/early July 2026:
- Update all AML policies and procedures
- Ensure that all relevant staff members receive training
The CLC will be amending key documents in the AML toolkit, and we will be sending out updates about these in forthcoming newsletters.
If you have any questions about the changes don’t hesitate to contact the CLC’s dedicated AML inbox at: [email protected]
