UK FATF Mutual Evaluation Taskforce: Second Meeting Report

The Financial Action Task Force (FATF), the world’s global standard-setting body on anti-money laundering (AML) and countering the financing of terrorism (CFT), is now in its fifth round of country mutual evaluations. These evaluations assess countries’ compliance with the FATF Recommendations on money laundering (ML), terrorist financing (TF) and proliferation financing, and the effectiveness of the measures they have put in place. Mutual evaluations are one of FATF’s most influential tools and the UK will be assessed in 2027.

As a leading global economy, the UK inherently faces risks from ML and other forms of illicit finance. The UK’s effectiveness in managing these risks will be the most important part of the assessment and, based on other countries’ fifth-round evaluations published so far, such as Singapore’s, FATF appears to have significantly increased the onus on some countries, such as Singapore, to demonstrate real outcomes. The FATF assessment team’s on-site visit has been confirmed for June 2027, and UK preparations are accelerating, including HM Treasury inviting third-sector partners to FATF’s assessed country training so that research and civil society inputs can form part of the evaluation evidence base.

Against this backdrop,the Centre for Finance and Security at RUSI relaunched the RUSI UK FATF Mutual Evaluation Taskforce in June 2026, bringing together a small group of experts from the private sector, law enforcement, government, academia and civil society. The Taskforce acts as a ‘critical friend’ to the UK and FATF, and will provide the FATF assessment team with third-party evidence to support the evaluation.

In its June 2026 meeting, the Taskforce took the same starting point as the FATF assessors will: the UK’s exposure to risk, as identified in the 2025 National Risk Assessment (NRA). First, the Taskforce identified changes in the UK context, ML and TF risks that warrant particular attention by the FATF assessment team, and areas where the UK’s understanding of risk might remain incomplete. Second, the Taskforce considered some of the barriers and tensions that affect the UK’s effectiveness in targeting the risks it faces.

The Changing Landscape Since 2018

At a macro level, the context has shifted significantly since the 2018 FATF evaluation, and the Taskforce was clear that this shift has reshaped the UK’s illicit finance risk picture. Geopolitically, Russia’s full-scale invasion of Ukraine and the UK’s sanctions regime have altered the threat environment and resulted in a step change in the UK’s response to illicit finance. Politically and economically, the UK’s departure from the EU has opened a new chapter for the UK’s standing in Europe and its global approach to trade and partnerships.

The Taskforce considered that, to secure its position economically, the UK is aiming to grow its financial services industry and find new markets (such as the Gulf), but new financial flows and deregulatory pressure bring with them illicit finance risks. The then-Chancellor's pro-growth letter to the UK’s main AML regulator, the Financial Conduct Authority (FCA), is symbolic of the Government’s drive towards regulatory simplification and international competitiveness. Simultaneously, the UK’s financial markets have made strides since 2018 with the rise of payment service providers (PSPs), electronic money institutions (EMIs), open banking and, most recently, AI – much of which has been driven by customer need for speed and lower cost.

The Taskforce agreed that the fraud landscape represented one of the greatest areas of change in the UK context since 2018, and this is a focus of chief executive officers and Boards across regulated banks. Southeast Asian organised criminality heightened the UK’s exposure and response to global fraud, especially from Cambodia, Laos and Myanmar. Fraud is a priority for the UK FATF Presidency from 2026 to 2028, which will run concurrently with the UK’s evaluation. The UK has launched a ‘Roadmap 26-28’ for combatting fraud under its Presidency, and Taskforce members considered that FATF still needs to clarify how to apply its methodology to fraud as a predicate offence to ML. While fraud is likely to be a significant area of focus for the FATF assessment team during the UK’s evaluation, it is unclear how the UK will be scored. While the UK’s leadership in improving its beneficial ownership register was recognised, one Taskforce member highlighted that the UK’s approach to having beneficial ownership data publicly available under the People with Significant Control (PSC) register may have exacerbated the fraud risk for the UK in some circumstances, as fraudsters can use this data in scams.

Where are the UK’s Most Materially Significant AML/CFT Risks?

There was broad consensus that a cluster of risks are particularly important for the UK’s evaluation.

Fraud

Fraud – against both people and the state – and its intersection with state threats and non-state organised criminal networks are among the most significant risks that have evolved since the UK’s last FATF evaluation. Southeast Asian cyber fraud operations and scam centres linked to hostile state actors are a prominent example of criminal networks that have targeted the UK. There was consensus among Taskforce members that fraud is not a standalone issue but flows through multiple financial and non-financial channels, exposing system vulnerabilities across traditional banking, retail banking, money mules and cryptocurrency. The Taskforce expected that a lot of the UK’s examples of public–private partnerships will feature fraud, such as the Data Fusion pilot and the Online Crime Centre.

Virtual Assets

Virtual assets and stablecoins represent another materially significant risk, as FATF has recognised on a global level. The UK’s risk in this area has grown substantially since 2018. The UK’s exposure to virtual assets risk includes crypto-enabled illicit finance connected to Iran and Russia. Taskforce members doubted the UK’s AML system for crypto is adequately connected to the systems that the UK has in place to deal with fraud, which is problematic given the high volume of crypto risk in fraud. Additionally, 84% of illicit transactions through digital assets involve stablecoins, which moved approximately $46 trillion globally in 2025, which was considered a quiet year. Stablecoins remain unregulated globally, with the markets in crypto-assets regulation covering only a fraction of the stablecoins actually transacted.