UK FATF Mutual Evaluation Taskforce: Third Meeting Report

The Financial Action Task Force (FATF) is the global standard-setter for anti-money laundering (AML), countering the financing of terrorism (CFT) and countering proliferation financing (PF), and is sometimes described as 'the most important international organisation you have never heard of'. FATF's country peer review assessments, formally called mutual evaluations (MEs), are one of its most influential tools. Led by international teams of trained FATF assessors, MEs evaluate countries on how well they are managing their exposure to illicit finance across money laundering (ML), terrorist financing (TF) and PF, based on their compliance with FATF's 40 Recommendations and the effectiveness of the measures they have put in place. For some countries, the results of an ME have carried consequences for their economy and global reputation.

FATF is currently beginning its 2027 evaluation, and the UK's ME report is scheduled to be agreed at FATF's February 2028 Plenary meeting in Paris. The UK is the world's largest financial services net exporter and second-largest exporter of professional and business services. It transacts billions of pounds daily, with UK foreign exchange hitting a record high in April 2026 and the UK's 2025 Trade Strategy positioning the UK as a 'services superpower'. This global connectedness means that the UK is inherently exposed to illicit finance, and the geopolitical context has brought new and intensified risks involving hostile states, sanctions evaders and criminals.

Notwithstanding the UK's risks, when it was last evaluated by FATF in 2018 it scored comparatively well, although FATF tasked the UK with strengthening its oversight of firms and increasing the resources of the UK Financial Intelligence Unit (UKFIU), which sits at the heart of the UK's response to illicit finance. However, FATF is now in its fifth round of country evaluations and has set a higher bar for countries on what it calls 'effectiveness': how well laws and regulations are being implemented and what has been achieved as a result. This sharper focus on results reflects FATF's own conclusion that many countries are passing laws but failing to take effective action to reduce their financial crime risks in practice.

Against this backdrop, RUSI's UK FATF Mutual Evaluation Taskforce brings together a small group of experts from the private sector, law enforcement and civil society to act as a 'critical friend' to the UK's 2027 FATF evaluation, with a view to supporting a well-evidenced and proportionate assessment of how the UK is doing. Having explored the UK's evolving ML, TF and PF risks and context in June 2026, the taskforce had its third meeting in September 2026 to discuss how the UK has managed these risks and what FATF is most likely to probe when evaluating the UK's effectiveness. FATF's methodology for judging effectiveness is based on 11 Immediate Outcomes (IOs). In the discussion, the taskforce concentrated on IOs 2 to 8, which RUSI had identified as especially – albeit not exclusively – pertinent to the risks identified in the previous taskforce meeting. IOs 2 to 8 cover how the UK cooperates internationally, oversees banks and other firms and professionals, prevents the misuse of companies and trusts, investigates and prosecutes ML, and confiscates illicit funds.

Unless otherwise indicated, statements in this paper reflect points raised during the discussions at the September 2026 taskforce meeting. None of the discussions at the meeting are attributable to any specific individual or organisation.

Important Issues for the UK's FATF Evaluation

IO2: International Cooperation

International cooperation involves law enforcement and other authorities working with their counterparts in foreign jurisdictions to locate criminals, exchange information and recover assets. The UK is a global financial hub and, according to its own National Economic Crime Centre (NECC),'an attractive location for laundering the proceeds of crime'. UK cooperation with other jurisdictions is vital to efforts to manage its illicit finance risks. The taskforce considered where the UK had invested well in international cooperation, such as through the International Anti-Corruption Coordination Centre and International Corruption Unit. The taskforce similarly commended the UK's efforts working with Singapore on Chinese-linked ML, partnerships with Nigeria and India to combat fraud, cooperation with Dubai police as part of the ambition set by the UK–UAE Partnership to Tackle Illicit Financial Flows, and the renowned Operation Destabilise, which was the biggest ML operation against Russian ML networks in both the UK and internationally. Although the taskforce praised these examples, it pointed out that FATF will expect the UK to clearly demonstrate that it prioritises international cooperation in line with its ML, TF and PF risk profile. The taskforce applauded the UK's international leadership on illicit finance and fraud through, for example, its hosting of the 2024 Global Fraud Summit and its commitment to hosting an Illicit Finance Summit in 2027, but felt that these examples demonstrate policy leadership rather than tangible progress towards cooperating internationally on ML cases. The taskforce also cautioned that FATF assessors will pay attention to international cooperation around confiscation and how well the UK uses mutual legal assistance.

FATF's assessment methodology considers the UKFIU to be a vital contributor to effective international cooperation because it is the most common route for exchanging financial intelligence with other jurisdictions. Yet, FATF's previous evaluations of the UK have raised concerns about the UKFIU's resources and capabilities. The taskforce acknowledged that the UKFIU has achieved results, for example, cooperating with Europol's Project A.S.S.E.T (Asset Search & Seize Enforcement Taskforce) and Interpol's Silver Notice initiative, which taskforce members believed had produced results such as asset freezes and seizures. Notwithstanding, the taskforce felt that the UKFIU will be a vulnerability for the UK's evaluation, and took the view that the UKFIU has continued to suffer from a lack of staff, technology and powers, although the government's new Anti-Money Laundering and Asset Recovery Strategy 2026–29 commits to putting the UKFIU's international team on a 'more sustainable footing' than it has been previously. Resourcing of the UKFIU is a longstanding problem, despite it being one of the busiest FIUs in the world and receiving more inbound requests for information from other countries than any other FIU globally. One taskforce member questioned why the government has never publicly explained why it has for so long failed to give the UKFIU the resources it needs to do its job on international cooperation, considering the government's own assessment that the UK is exposed to high levels of ML risk.

Taskforce members anticipated that, in practice, FATF will scrutinise the time that the UKFIU takes to respond to international partners' requests for information, and the value that the UKFIU adds to these exchanges through its own analysis. The taskforce felt that, while the UKFIU's performance on international exchange of information had potentially deteriorated following the UK's 2018 ME report, it had progressively improved recently, although taskforce members could not say whether this would be enough to satisfy FATF. In the current cycle of FATF evaluations, FATF has begun asking other countries for feedback on the assessed country's international cooperation. The taskforce felt that feedback on cooperating with the UK will be crucial for the UK's evaluation, and that the FATF assessment team should speak to the UK's partner jurisdictions to get an honest view.

IO3: Financial Sector and Virtual Asset Supervision and Preventative Measures

According to FATF, the financial sector plays an essential role in preventing ML, TF and PF from entering the financial system, and this prevention is considered the first line of defence against illicit finance. The financial sector is one of the UK's materially important sectors because it is among the largest contributors to the UK economy and one of the UK's most internationally facing sectors. The taskforce commended the Financial Conduct Authority (FCA) – the UK's financial sector regulator – for its investment since the UK's 2018 ME in improving risk-based oversight of the financial sector for AML/CFT, and taskforce members felt that these efforts had paid off; for example, the FCA uses data and intelligence to understand emerging financial crime risks and better police financial services firms and the controls they put in place. However, the taskforce challenged whether the FCA truly has enough staff to supervise such a large financial sector effectively, including having FCA staff onsite in large banks and visiting firms for inspections, noting that supervisory coverage was problematic for the UK in its 2018 FATF ME report.