2025: Key anti-money laundering updates

A number of important updates have been published this year from an anti-money laundering perspective, namely: 

• 26 June 2025 (amended 10 July 2025): HMRC published detail of penalty notices it issued between 1 October 2024 and 31 March 2025 for breaches of the money laundering regulations (“MLRs”). 
• 17 July 2025: HM Treasury published its response to a consultation on reforming the MLRs. 
• 17 July 2025: The “National Risk Assessment of Money Laundering and Terrorist Financing 2025” was published. 
• 2 September 2025: The policy note, “The draft Money Laundering (Amendment and Miscellaneous Provision) Regulations 2025”, was published. 
• 8 December 2025: The “Anti-Money Laundering and Counter-Terrorist Financing: Supervision Report 2024-25” was published. 

We have set out below key takeaways for the art market in relation to these publications. Of particular interest are the proposed changes to the MLRs which are expected to come into force in early 2026. These amendments will impact the extent to which enhanced due diligence (“EDD”) needs to be carried out.
 

Supervision Report 2024 - 25

On 8 December, the Anti-Money Laundering and Counter-Terrorist Financing: Supervision Report 2024-25 was published.

The statistics set out in the report make clear that HMRC, as the anti-money laundering supervisor for the art market, continues to take a proactive and intrusive approach to its supervisory role. Supervisors use a range of tools to assess whether firms are complying with the MLRs including desk-based reviews and onsite visits, which together are known as direct supervision actions.

During the 2024-25 reporting period, HMRC carried out 1,243 direct supervision actions, comprising 451 desk-based reviews and 792 onsite visits. This is a decrease from 1,443 direct supervision actions conducted by HMRC in the 2023-24 reporting period.

Of the 1,243 direct supervision actions carried out during the 2024-25 reporting period, 60% resulted in assessments of non-compliance. This is an increase from 43% of businesses assessed to be non-compliant in the 2023-24 reporting period. Furthermore, 0.5% of non-compliant businesses were found to have been non-compliant when last assessed.

The report sets out the most frequent forms of non-compliance identified in cases closed by HMRC during the 2024-25 reporting period. This included:

• inadequate documented policies and procedures;
• failure to provide specified information;
• inadequate client risk assessment; and
• inadequate record keeping.

In response to assessments of non-compliance, HMRC may take both informal and formal action, the latter of which may include financial penalties, referral to law enforcement, and suspension or cancellation of a business’ registration. The report sets out that in the 2024/25 reporting period, HMRC took 798 formal actions against businesses. This is an over 400% increase from the 2023-24 reporting period, where 157 formal actions were taken against businesses.
 

Trends in Enforcement Action 

We are able to further assess the extent to which such supervisory action translated into enforcement action by looking at the list of penalty notices published by HMRC for breaches of the MLRs.

In the period 1 October 2024 – 31 March 2025, HMRC issued 368 penalty notices, amounting to around £2.25 million in financial penalties.

A significant majority of the enforcement action taken by HMRC continues to be for failures to apply for registration at the required time (i.e. a breach of Regulation 56 of the MLRs). However, as the table below shows, HMRC is steadily increasing its enforcement action against businesses for a breach of the MLRs other than for solely a failure to register at the required time.

In relation to the most recent reporting period, 35 penalty notices published by HMRC were for a breach of the MLRs other than for solely a failure to register at the required time. Nineteen of these penalty notices related to a failure to notify HMRC of a material change (i.e. a breach of Regulation 21 of the MLRs).

The two largest financial penalties imposed in the period, both being over £100,000, related to a range of MLR breaches. Importantly, an art market participant received the largest financial penalty in this period, with a financial penalty of £158,679 being imposed for failures in:

• carrying out risk assessments;
• having the correct policies, controls and procedures;
• appropriate staff training; and 
• conducting due diligence, timing verification and record keeping.

Whilst these fines do not come close to the near £1.5 million financial penalty imposed against a money service business in 2022, they do make the list as the third and fourth largest supervisory fines ever imposed by the HMRC for breaches of the MLRs.

Table to show the number of published penalty notices for a breach of the MLRs other than for solely a failure to apply for registration at the required time
 

National Risk Assessment 2025

In July, the National Risk Assessment of Money Laundering and Terrorist Financing 2025 was published (the “NRA”). The NRA is described as a stock-take of current and emerging money laundering and terrorist financing risks. Such risks are considered from a UK wide perspective, and those which are specific to certain sectors.

The risk rating for money laundering in the art market sector has decreased from high to medium since the last NRA. The decreased risk score is stated to be as a result of HMRC’s improved understanding of the risks in the art market sector. However, the use of private sales or intermediaries, and the cross-border nature and price fluctuations associated with the art market, mean that the art market remains susceptible to money laundering. The terrorist financing risk remains low as the sector is generally viewed as unattractive to terrorists.

The NRA sets out that common issues within the art market include:

• insufficient risk assessments and policies, controls and procedures; and 
• low Suspicious Activity Report (“SAR”) reporting and registration with the SAR portal compared to the risk. The NRA describes the submission of SARs as both important for compliance but also building a collective understanding of the risks encountered in the art sector. 
   

Proposed Amendments to the MLRs

In September, HM Treasury published proposed amendments to the MLRs, which are likely to be implemented early next year. Some of the key amendments relevant to the art sector are as follows:

• The €10,000 threshold triggering compliance with the MLRs is set to be amended to sterling (i.e. £10,000). On the current currency conversion, this would result in a slight increase to the threshold.
• Changes have been proposed that will likely result in a decrease in the volume of triggers to carry out EDD. This is by far the most consequential amendment that is forthcoming and will have an impact on the extent to which EDD is carried out:

(a) In relation to “complex and unusually large” transactions, the government has proposed an amendment that clarifies that EDD is required only for transactions that are “unusually complex or unusually large” relative to what is typical for the sector or the nature of the transaction. The idea is to refine the existing requirement to ensure firms focus their compliance efforts on transactions that present genuinely higher risks.

(b) “High-risk third countries” is currently defined as any country on the FATF’s ‘increased monitoring’ and ‘call for action’ lists. As of 24 October, there are currently 20 countries on the ‘increased monitoring’ (or grey list).

The proposed amendments would narrow this definition, meaning EDD would only need to be applied to transactions or customers involving ‘call for action’ (or black list) countries. That is three countries – Iran, North Korea and Myanmar.

Both the grey and black lists must still be considered when carrying out customer risk assessments. However, customers established in grey list countries will no longer automatically require EDD.

• The government has confirmed that employees “acting on behalf of” an employer are not subject to the verification obligations set out in Regulation 28(10). This provision was intended to apply to entities acting on behalf of individuals e.g. under a power of attorney, or as an agent or intermediary. Guidance across sectors will be reviewed to ensure consistency in approach. 

Practical Implications 

With HMRC showing appetite to take formal action and issue six figure fines, it’s important that firms take stock and make sure they have adequate policies and procedures in place to avoid falling foul of the MLRs – and that those procedures are given meaningful effect in the conduct of day-to-day business.

Firms should revisit their internal risk assessments, policies and procedures to ensure controls are responsive to the vulnerabilities identified in the NRA. This might mean reviewing and updating controls which includes training staff to identify risk indicators and to meet compliance expectations.