UK Government Raises Money Laundering Threshold: What It Means for You

In a significant move to tackle money laundering more effectively, the UK Government has announced changes to the Proceeds of Crime Act 2002. Starting in 2025, the financial threshold for certain exemptions related to money laundering offences will increase from £1,000 to £3,000. Here's what you need to know about this change and its implications.

What Does the Change Entail?

The legislation targets two specific scenarios under the Proceeds of Crime Act 2002:

1. Operating an Account: Banks and financial institutions can operate accounts for transactions like mortgage payments without fear of committing a money laundering offence, as long as the transaction is below the new £3,000 threshold.

2. Ending a Business Relationship: When a business terminates its relationship with a customer, they can return funds or property without breaching the law, provided the amount is below £3,000.

These exemptions are crucial as they apply when criminal activity is suspected but not confirmed, streamlining operations for legitimate businesses while keeping an eye on suspicious activities.

Why the Change?

The increase in the threshold is part of a broader strategy to allocate resources more effectively. In 2024, around 23,000 suspicious activity reports (SARs) were submitted for transactions between £1,000 and £3,000, but only a fraction led to asset denial. By raising the threshold, law enforcement can focus on more significant cases, enhancing efforts to disrupt criminal activities.

Impact on Businesses and Customers

• For Businesses: The change reduces the burden on financial institutions, allowing them to focus on higher-value transactions. It also means fewer reports to file, saving time and resources.

• For Customers: The adjustment is expected to decrease instances where legitimate customers face account access issues, improving overall customer experience.

Maintaining Vigilance

While the threshold change aims to streamline processes, businesses are still required to report any suspicious transactions under section 330 of the Proceeds of Crime Act, regardless of the amount. This ensures continued vigilance against money laundering.

Looking Ahead

The government has committed to reviewing the impact of this change in 2026, ensuring that it strikes the right balance between reducing low-value reporting and enhancing focus on significant financial crimes.

Overall, this legislative update is designed to make the fight against money laundering more efficient, without compromising the integrity of the financial sector. Businesses and customers alike can rest assured that the UK remains dedicated to combating financial crime effectively.