UK National Risk Assessment (NRA) on Money Laundering & Terrorist Financing

James Ross
Jul 20
6 min read

Executive Summary

The 2025 National Risk Assessment (NRA) confirms that the United Kingdom continues to face a high level of money laundering (ML) risk and a substantial terrorist financing (TF) threat. The UK's position as a global financial hub with an open economy, while a source of strength, is systematically exploited by domestic and international criminals and terrorist actors. The threat landscape is continuously evolving, shaped by geopolitical instability, the proliferation of new technologies, and shifting criminal methodologies.

This assessment identifies fraud, sanctions evasion, and drug trafficking as the primary generators of illicit funds within the UK. Criminals increasingly leverage cryptoassets, informal value transfer systems, and traditional methods, such as cash and property, to launder their proceeds. The abuse of UK corporate structures and the complicity of professional enablers remain critical vulnerabilities.

The terrorist financing threat remains substantial, meaning an attack is likely. While large-scale, complex funding plots are a concern, the primary danger comes from low-sophistication attacks funded through small, hard-to-detect sums, often from legitimate sources.

The implications of these findings are clear: the UK’s anti-money laundering and counter-terrorist financing regime requires continuous adaptation. A robust response must be built on enhanced public-private collaboration, targeted and risk-based supervision, investment in technology, and strengthened international partnerships to combat the transnational nature of these threats. This NRA serves as a critical guide for government, law enforcement, and the private sector, focusing resources and efforts on the most significant risks to protect the UK’s economy and security.

Part 1: Overall Risk Landscape. The UK's economic and financial infrastructure is integral to its prosperity, but it also creates vulnerabilities that criminals and terrorists exploit. This assessment finds:

Overall Money Laundering (ML) Risk: Remains High. This is driven by the scale and international nature of the UK's financial sector, its appeal for foreign investment, and the ease of company formation.
Overall Terrorist Financing (TF) Threat Level: Remains Substantial, which, as defined by the Joint Terrorism Analysis Centre (JTAC), means an attack is considered likely.

New technologies, particularly cryptoassets and Artificial Intelligence (AI), are creating new avenues for financial crime, while geopolitical tensions have markedly increased the threat from state-affiliated actors and sanctions evasion.

Part 2: Key Findings on Money Laundering (ML) Risks

Top Predicate Offences Generating Illicit Funds

Fraud is the most significant driver of money laundering. It accounted for over 43% of all crime in England and Wales, with an estimated 4.1 million incidents in the year ending December 2024. Over 70% of fraud targeting UK citizens or businesses has an international element.
Sanctions Evasion: The threat has increased significantly since 2020, primarily due to measures against Russia. As of April 2025, over 3,600 individuals and 990 entities are subject to UK financial sanctions.
Drugs: The illicit drug trade remains a core generator of criminal profit, estimated to cost England £20 billion annually in related harms. Cash is the predominant medium for transactions.
Cyber Crime: The use of cryptoassets as a payment method for cyber extortion is prevalent. Ransomware prevalence among businesses doubled to 1% between 2024 and 2025.
Tax Evasion: The tax gap linked to evasion and criminal attacks is estimated at £10.8 billion for the 2023/24 fiscal year (£6.4 billion from evasion and £4.4 billion from criminal attacks).
Modern Slavery and Human Trafficking (MSHT): Recorded offences reached 9,036 in 2024. The number of potential victim referrals has increased by 80% since 2020.

Prominent Money Laundering Typologies

Cash-Based ML: Risk remains High. Illicit cash flows are estimated to exceed £12 billion per year. Post Office deposits have seen a 10% year-on-year increase, with hundreds of millions potentially being criminal cash.
Cryptoassets: The ML risk has increased significantly to High. The National Crime Agency (NCA) estimates that between $$1.7~\text{billion}$ and $$5.1~\text{billion}$ in illicit cryptoasset transactions are linked to the UK annually. Criminals are migrating towards stablecoins and less-regulated exchanges.
Informal Value Transfer Systems (IVTS): Widely used by transnational organised crime groups, particularly Chinese underground banking networks, to move funds related to drug trafficking and organised immigration crime.
Trade-Based Money Laundering (TBML): The scale of this threat is significant, with the NCA estimating that over £10 billion is laundered through UK-based TBML schemes each year.
Property remains a desirable method for laundering large sums, with estimates suggesting that up to £10 billion could be laundered through the UK property market annually.
Companies and Trusts: The abuse of UK corporate structures and legal arrangements to obscure beneficial ownership is a key vulnerability. As of March 2024, over 733,000 trusts were registered with HMRC.

Part 3: Key Findings on Terrorist Financing (TF) Risks

The financing of terrorism in the UK is characterised by the use of small sums, making detection challenging.

Funding Mechanisms: Terrorists and sympathisers primarily use legitimate income sources—such as salaries, benefits, and loans—to fund their activities. Most common low-sophistication attacks require minimal funding.
Islamist Terrorism: This remains the primary terrorist threat, accounting for approximately 67% of attacks since 2018 and the majority of TF investigations.
Extreme Right-Wing Terrorism (ERWT): This is the second greatest domestic threat, accounting for around 22% of attacks since 2018 and approximately a quarter of TF investigations.
Northern Ireland-Related Terrorism (NIRT): The threat level in Northern Ireland remains Substantial. Dissident Republican groups raise funds through a range of criminal activities, including smuggling, extortion, and fraud.
International TF Links: Groups like the PKK leverage UK-based networks and organised crime connections to raise millions of pounds, often through legitimate-seeming community fundraising and crowdfunding campaigns.

Part 4: Sector-Specific Risk Assessments

The risk levels vary significantly across the regulated sectors, requiring a tailored supervisory response.

Sector	ML Risk	TF Risk	Key Notes & Vulnerabilities
Retail Banking	High	High	Ubiquity, high transaction volumes, and money muling (37,000 associated accounts in 2023).
Wholesale Banking	High	Low	High-value cross-border transactions expose the sector to grand corruption and complex fraud.
Wealth Management	High	Medium	Manages high-value assets and services for high-risk clients, including Politically Exposed Persons (PEPs).
Insurance	Low	Low	Generally unattractive for rapid laundering due to the structure of the products.
EMIs & PSPs	High (from Medium)	High (from Medium)	Rapid growth (annual value from £921 billion to £2.06 trillion), complex services, and a borderless nature.
Cryptoasset Service Providers	High (from Medium)	Medium (from Low)	Increased criminal adoption, anonymity features, and speed. Only 48 of 368 firms met FCA standards.
Money Service Businesses	High	High	Highly cash-intensive, global reach, and exploited for IVTS. Nine hundred eighty-three principals registered with HMRC.
High Value Dealers	Medium (Risen)	Low	High-value goods are used for profit and to store value. £7 million in assets seized in 2023/24.
Art Market Participants	Medium (from High)	Low	High values, appreciation, and potential for private, opaque sales. 1,337 registered with HMRC.
Casinos	Medium (from Low)	Low	Growth of remote gambling, use as MSBs, and international high-rollers.
Non-Profit Organisations	Low (Risen)	Low	Vulnerable to abuse via interest-free loans and online giving platforms.
Legal Service Providers	High	Low	Provide a veneer of legitimacy, handle large client accounts, and create complex structures.
Accountancy Service Providers	High	Low	Can be complicit in legitimising illicit funds and obscuring financial trails.
Trust/Company Service Providers	High	Medium (from Low)	Create and manage structures that provide anonymi—over confidentiality. Over 000 UK TCSPs.
Estate Agency Businesses	Medium (Risen)	Low	Property remains a stable and attractive asset for laundering large sums of money.
Letting Agency Businesses	Low (Decreased)	Low	Primarily a risk for high-value rentals (over €10,000/month) which are regulated.

Part 5: Emerging and Cross-Cutting Risks

Artificial Intelligence (AI): Criminals can exploit AI to enhance social engineering, create synthetic identities for mule accounts, and bypass AML controls. Conversely, AI presents significant opportunities for defensive technologies.
Schools and Universities: The sector is vulnerable to receiving illicit funds for tuition fees, particularly from individuals linked to corruption abroad. Students are also actively targeted for recruitment as money mules, with 29% saying they would risk someone using their account.
Football Clubs and Agents: The high financial flows and complex ownership structures in football make it an attractive target for laundering and reputational cleansing by criminals and kleptocrats.

Part 6: Implications and Strategic Response

The findings of the 2025 NRA necessitate a dynamic and multifaceted response from the UK government, law enforcement, and private sector partners. Key strategic implications include:

Continuous Adaptation: The AML/CTF framework cannot remain static; it must evolve to address threats from emerging technologies, such as cryptoassets and AI, and respond to geopolitical shifts.
Enhanced Public-Private Partnership: The success of the UK’s response is contingent upon the deep collaboration fostered by bodies such as the National Economic Crime Centre (NECC) and the Joint Money Laundering Intelligence Taskforce (JMLIT). The Suspicious Activity Reports (SARs) regime remains central to this effort.
Targeted Sectoral Supervision: Regulators must apply a risk-based approach, tailoring supervision to the specific vulnerabilities of each sector. The increased risks in the EMI and cryptoasset sectors demand heightened scrutiny and potential regulatory enhancements.
Closing Regulatory Gaps: Loopholes that criminals exploit must be closed. This includes legislating to bring activities such as the onward sale of shelf companies within the scope of the Money Laundering Regulations.
Strengthening International Collaboration: As most serious financial crime is transnational, the UK must continue to deepen its international partnerships to facilitate intelligence sharing, asset recovery, and coordinated action.
Focus on Professional Enablers: Robust supervision and stringent enforcement action against legal, accountancy, and trust professionals who enable financial crime are paramount to disrupting money laundering networks.
Increased Public Awareness: Public education campaigns are crucial in reducing vulnerability among the general population, particularly students, to being recruited as money mules.