FATF Status

The United Kingdom is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in the United Kingdom was undertaken in 2022. According to that Evaluation, the United Kingdom was deemed Compliant for 24 and Largely Compliant for 15 of the FATF 40 Recommendations. It remains rated Highly Effective for 4 and Substantially Effective for 4 of the Effectiveness & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

United Kingdom is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

The United Kingdom (UK) is a leader in combating illicit finance.  Money laundering presents risks to the UK because of the size and sophistication of its financial system.  UK law enforcement combats cash-based money laundering, the drug trade, and high-end money laundering through the financial sector and professional services.  The country is implementing its Economic Crime Plan (2019-2022), which includes public and private sector reform.  The UK should strengthen its financial intelligence unit’s (FIU) capabilities, reduce inconsistencies in the supervisory regime, and increase its international reach to tackle money laundering.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          71

World Governance Indicator – Control of Corruption             93

Corruption does not represent a constraint to business in the United Kingdom, and companies are very unlikely to be put in a situation where bribery is needed. Despite some isolated instances of abuse of administrative power, the UK promotes high ethical standards in public services. The UK Bribery Act establishes liability for corruption offences committed anywhere in the world, including bribery between businesses and of foreign public officials. It also introduces a liability offence for companies that fail to prevent bribery committed by representatives; this can be avoided only by implementing preventive anti-corruption policies and procedures. There is no distinction made between bribery and facilitation payments, and these practices rarely occur in the UK. Gifts and hospitality can be considered illegal depending on the intent and benefit obtained. The UK has a strong legal framework for fighting bribery at home and abroad, and the agencies tasked with fighting corruption are efficient and independent. For further information - GAN Integrity Business Anti-Corruption Portal

The United Kingdom (UK) is an attractive destination for foreign direct investment (FDI) and imposes few impediments to foreign ownership.  The country offers a robust, business-friendly environment to reliably expand trade and invest. It has a mature, high-spending consumer market and an open, liberal economy with world-class talent. Investors have access to a market of 67 million people, diverse suppliers and partners, and benefit from a range of programs to help businesses of all shapes and sizes grow, including a £100 billion infrastructure spending commitment.

Market entry for U.S. firms is facilitated by a common language, legal heritage, and similar business institutions and practices.  The UK is well supported by sophisticated financial and professional services industries and has a transparent tax system in which local and foreign-owned companies are taxed alike.  The pound sterling is a free-floating currency with no restrictions on its transfer or conversion.  There are no exchange controls restricting the transfer of funds associated with an investment into or out of the UK. UK legal, regulatory, and accounting systems are transparent and consistent with international standards.  The UK legal system provides a high level of protection.  Private ownership is protected by law and monitored for competition-restricting behavior.

Prime Minister Rishi Sunak aspires for the UK to be an “innovation nation” and has publicly committed to using science and technology to drive growth and achieve a net-zero carbon emissions economy. Although the UK has been relatively forward leaning on renewable energy in recent years, Russia’s war against Ukraine further accelerated government aims to have more homegrown energy and a more diversified supply of natural gas. On March 30, 2023, the UK government announced a “Powering Up Britain” package that includes an Energy Security Plan, which details efforts to decarbonize the UK’s energy system, and a Net Zero Growth Plan, which includes ambitions in areas such as offshore wind, low-carbon hydrogen, carbon capture and storage, new nuclear, and green finance, among others, with an eye toward a carbon-neutral economy by 2050.

With the onset of the war in Ukraine in February 2022, and the introduction of sanctions against Russia, the UK government accelerated its plans to tackle money laundering by foreign entities. Less than a month after the invasion, Parliament approved the Economic Crime (Transparency and Enforcement) Act 2022, which obliges overseas entities to register beneficial owners of UK properties. Further legislative measures to combat illicit finance may follow.

To facilitate inward foreign investment, the UK government’s Invest in the UK website (https://www.great.gov.uk/international/investment/) is a comprehensive source of information on the advantages of investing in the UK, current investment opportunities, sector specific background, and government contacts. Over the past decade, the UK has been one of Europe’s top recipients of FDI and it remains the top destination for U.S. outbound investment, totaling more than $1 trillion in 2021. According to the UK’s Office of National Statistics, both the inward and the outward FDI positions (stocks) increased in 2021 compared with 2020; the UK’s inward position increased to £2 trillion ($2.8 trillion), while the outward position increased to £1.8 trillion ($2.5 trillion). However, total net FDI flows into the UK fell to -£51.7 billion ($71.1 billion) in 2021, while net flows abroad totaled £61.7 billion ($84.9 billion) over the same time. The OECD reports inward FDI to the UK totaled $63.3 billion in the first nine months of 2022. The UK government provides comprehensive statistics on FDI in its routine investment updates.  https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/foreigndirectinvestmentinvolvingukcompanies/2021 

Country Links

UK Financial Intelligence Unit (NCA)

Financial Conduct Authority (FCA)

Prudential Regulation Authority (PRA)

Bank of England