Financial Services Matters - October 2025

Application for authorisation or registration: FCA shares examples of good practice and areas for improvement

On 11 September 2025, the FCA shared examples of good practice and areas for improvements for firms preparing to make an application to become FCA authorised or registered. The FCA's examples are organised around three areas:

• appropriate staffing with relevant skills and experience

• robust policies documenting processes and procedures

• adequate financial resources for the business scale.

Appropriate staffing with relevant skills and experience

• Over-reliance on external consultants: firms must demonstrate they understand their regulatory obligations independently, rather than depending on compliance consultants.

• Unclear time allocation: where individuals have multiple responsibilities, firms need to show how time will be allocated to fulfil each role competently.

• Documentation gaps: firms must provide evidence of staff eligibility to work in the UK or provide addresses supporting claims of UK-based operations.

Robust policies documenting processes and procedures

• Generic, untailored policies: firms must demonstrate that their policies are tailored to the specific business model.

• Rule repetition rather than implementation: firms must provide a clear explanation as to how they comply with FCA rules.

• Incomplete customer scenario planning: firms must demonstrate detailed consideration of all likely customer situations when designing systems and controls.

• Misaligned focus: firms must concentrate on risks the business model poses to customers rather than risks to the firm.

• Vague IT descriptions: Clear information about planned technology systems and infrastructure must be provided. 

Adequate financial resources for the business scale

• Missing historical accounts: firms must submit required financial documentation with initial applications.

• Inaccurate submissions: firms should endeavour to ensure correct information is provided at the submission stage to reduce the number of follow-up requests.

• Insufficient verification: firms must include adequate evidence of financial resources that meet prudential requirements. 

FCA speech on regulatory perspective and priorities for 2025

On 25 September 2025, Lucy Castledine, director of consumer investments at the FCA, delivered a speech on the FCA's 5-year strategy and its four priorities:

• supporting growth
• being a smarter regulator
• helping consumers navigating their financial lives
• fighting crime.

Among the topics covered in the speech are the FCA's work on targeted support, the FCA's sandboxes and AI Lab, data decommissioning, gaps in risk assessments and fair value checks among some neo-brokers.  

Castledine also highlighted the FCA's concerns with the unlawful promotion of financial services on social media.  In particular, she noted that that there are too many weaknesses in the controls of social media platforms, observing that "[i]t is too easy for bad actors to evade blocks," through 'phoenixing' or 'lifeboating' to new accounts, and she warned about new threats such as deep fakes of authorised firms.  Castledine called on social media platforms "to step up and stop this illegal content at source."  She said the FCA welcomed the introduction of the Online Safety Act and looked forward to its "robust implementation."  Finally, she asked regulated firms to inform the FCA if they are seeing illegal content and share any challenges they are encountering when reporting illegal content to tech platforms, such as deep fake scams.

Market Watch 83: market abuse risks and systems and controls at corporate finance firms

On 8 September 2025, the FCA published Market Watch 83. The newsletter contains the FCA's observations from a series of reviews of corporate finance firms that provide advisory and corporate broking services to small and mid-cap companies. The reviews focused on firms’ systems and controls for handling inside information about their corporate clients.

The newsletter covers:

• market soundings, including managing the number of Market Sounding Recipients, the risk of unlawfully disclosing inside information during a market sounding, practices for identifying and agreeing the deal-specific information to share with the MSR and concerns regarding multiple brokers marketing sounding for a transaction
• the control of environments in smaller firms
• personal account dealing.

The FCA's observations will help firms to benchmark their systems and controls, and assess whether their own arrangements are in alignment with the standards expected.

Market Watch 84: market conduct, transaction reporting issues and UK EMIR reporting

Market Watch 84, published on 30 September 2025, focuses on UK EMIR reporting requirements, one year after the FCA and the Bank of England made changes to the reporting regime, referred as UK EMIR Refit.

The FCA shares its observations on implementation, change and vendor management, which are based on its supervisory work, data analysis and feedback it has received from the joint FCA and Bank of England UK EMIR Reporting Industry Engagement Group. It also looks at UK EMIR errors and omissions notifications.

The FCA's findings will also be of interest to firms subject to transaction reporting requirements under the UK Securities Financing Transactions Regulation and UK Markets in Financial Instruments Regulation. Its insights into change management may be relevant to firms more generally that are undertaking regulatory change projects.

Over the next year the FCA will prioritise the improvement of overall data by:

• collaborating with industry to support more accurate and complete reporting
• increasing its focus on reconciliation rates
• closely monitoring breach notifications and actively engage with firms that fail to meet its expectations
• assessing counterparties’ systems and controls to ensure they are reporting accurately. This includes being able to correct errors across both live and matured trades. 

Counterparties are expected to have appropriate arrangements in place to support each of these workstreams.

UK regulators sign memorandum of understanding with FINMA

On 23 September 2025, the FCA, PRA and Bank of England signed a memorandum of understanding (MoU) Swiss Financial Markets Supervisory Authority (FINMA) under the Berne Financial Services Agreement (BFSA).

The memorandum sets out details of the co-operation under the BFSA and lays down how FINMA, the FCA and PRA will exchange information needed for their supervisory work under the agreement, including:

• the scope of co-operation activities

• the process for exchanging requested information and requests for assistance

• unsolicited information sharing

• confidentiality and the onward sharing of information.

Although the MoU does not create legally binding obligations, it is intended that each authority will use reasonable endeavours to provide the other authorities with the fullest co-operation.

The MoU takes effect on the date the BFSA enters into force, which is expected to be early 2026.

New FCA webpage on Smart Data Accelerator 

On 22 September 2025, the FCA published a new webpage on the Smart Data Accelerator with the aim of advancing Open Finance and smart data for UK businesses.

The webpage includes:

• an overview of the Accelerator in practice, which offers a secure, dedicated space for research, testing and experimentation

• details of the Accelerator features, which are organised into four pillars: use case testing, policy testing, international and cross-sector testing, and data and tech infrastructure

• information of how stakeholders can take part in the Accelerator

• a note that the findings following the Open Finance Sprint, the outcomes report for which was covered in our August 2025 edition, are informing the Smart Data Accelerator's priorities and upcoming work.

To get involved and receive updates on the Accelerator, interested stakeholders should contact the FCA at SmartDataAccelerator@fca.org.uk.

Tech-positive approach is central to FCA growth strategy for UK financial services

Jessica Rusu, the FCA's chief data, information and intelligence officer, in a speech published on 18 September 2025, highlighted the important role innovation and technology, including AI, will play in supporting the growth of the UK financial services industry and, in particular, the ability for FinTechs to scale operations in the UK.

Important points covered included:

• The FCA is committed to creating a regulatory environment that supports innovation through initiatives such as Smart Data Accelerator (see above), and the Supercharged Sandbox and AI Live Testing, which are designed to support safe experimentation and deployment of AI in financial services.

• The FCA's regulatory approach will remain principles-based and outcomes-focused but with an increasingly tech-positive approach.

• The FCA, through implementation of technology and innovative measures in their own supervisory work, hope to keep pace with increasingly data-driven financial markets.

FCA chief economist sets out a new 'risk-balancing' strategy to support financial services industry growth

Kate Collyer, the FCA's chief economist, in a speech published on 17 September 2025, outlined the FCA's strategy to support the financial services industry within the UK which is focused on rebalancing risk to support innovation following a low annual growth rate within the last decade. 

The key proposed reforms outlined included:

• reforms to the mortgage affordability criteria

• reforms to listing regimes

• the introduction of a new Private Stock Market initiative

• the introduction of measures to widen investment opportunities

• finalising proposals aimed at enhancing financial advice and market access.

Publication of Markets in Financial Instruments Regulation 2025

On 16 September 2025, the Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 were published, accompanied by an explanatory memorandum. The Regulations retain key definitions from the MiFID Org Regulation within UK domestic financial services legislation.

A subsequent statutory instrument will be made to revoke the MiFID Org Regulation, with firm facing provisions to be replaced by pending FCA and PRA rules.

FCA publishes consultation paper on minimum standards for cryptoasset firms

On 17 September 2025, the FCA published a consultation paper (CP25/25) on FCA minimum standards for cryptoasset firms, which is divided into consultation chapters and discussion chapters.

Where appropriate, the FCA's proposals are based on the principle of ‘same risk, same regulatory outcome’.

The FCA is consulting on how the rules in its FCA Handbook will apply to firms. This includes:

• High Level Standards such as the Senior Management Arrangements, Systems and Controls (SYSC) Sourcebook (including governance, Senior Managers and Certification Regime, financial crime and operational resilience)

• Business Standards (specifically the Environmental, Social and Governance Sourcebook). 

The deadline to provide feedback on the consultation chapters is 12 November 2025.

The discussion proposals include:

• the Consumer Duty

• the Conduct of Business sourcebook

• Product Intervention and Product Governance Sourcebook

• Redress (Dispute Resolution: Complaints) 

• application of the Financial Ombudsman Service.

The deadline to provide feedback on the discussion chapters is 15 October 2025.

EU MiCA update

ESMA compliance tables

On 19 September 2025, the ESMA published three compliance tables relating to the guidelines for reverse solicitation, particular aspects of the suitability and portfolio periodic statement guidelines and crypto-asset transfer guidelines under MiCA.

• compliance table on MiCA reverse solicitation Guidelines

• compliance table on MiCA suitability and portfolio periodic statement Guidelines

• compliance table on MiCA crypto-asset transfer Guidelines.

New regulations under MiCA come into force

On 15 September 2025, two important supplementary regulations were published in the Official Journal of the European Union that provide detailed guidance on the authorisation process for asset-referenced tokens (ARTs) under the Markets in Crypto-assets Regulation (MiCA).

Commission Delegated Regulation (EU) 2025/1125 specifies the information to be included when applying for authorisation to offer ARTs to the public or seek their admission to trading.

Commission Implementing Regulation (EU) 2025/1126 creates implementing technical standards in relation to standard forms, templates, and procedures that applicants must use when submitting authorisation applications.

The two new regulations establish a comprehensive framework for ART authorisation applications and entered into force on 5 October 2025.

French, Austrian and Italian market authorities propose MiCA amendments

On 15 September 2025, the French Autorité des Marchés Financiers (AMF), the Austrian Finanzmarktaufsichtsbehörde (FMA) and the Italian Commissione Nazionale per le Società e la Borsa (CONSOB) proposed targeted amendments to MiCA following a review of the practical implementation of the regime, which highlighted critical differences in the application of the regulations by national authorities.

The AMF, FMA and CONSOB have proposed the amendments as a way to strengthen the supervisory architecture, ensure consistent and effective application of the regulation, reduce opportunities for 'forum shopping', lower supervision costs and enhance security for crypto-asset markets and increase investor confidence. 

The proposed amendments are:

• Direct supervision by ESMA of the major crypto-asset providers.

• Imposing stricter rules on the platforms targeting EU investors despite operating outside the EU. The authorities propose that intermediaries executing orders on crypto-assets should do so on a platform that is compliant with MiCA or equivalent regulations. 

• Better supervision of platforms to reduce cyber risk, through the introduction of an independent cyber security audit requirement prior to granting a MiCA authorisation and a periodic renewal.

• Clarifying the scrutiny process on white papers and the possible creation of a single access point for the filing and management of token offerings (excluding stablecoins), which will bring greater legal certainty to the analysis of white papers, and promote the centralisation of filings.

High Court considers recovery duty on sending bank in APP fraud claim

In Barclay-Ross v Starling Bank Ltd [2025] EWHC 2158 (KB), the High Court considered the merits of potential claims against Starling relating to alleged authorised push payment (APP) fraud. Contrary to Starling's request, it held that the claim should not be struck out in its entirety.

It held, through application of the comments made in Philipp v Barclays which we covered in our June 2025 article, that there might be an arguable allegation that a bank will breach its contractual and tortious duties to execute its mandate with due care and skill if it fails to seek the account holders' instructions to recover monies paid once it has been notified that the payment was induced by fraud.

Key impacts of the decision are:

• APP fraud victims, even in a post-Philipp v Barclays environment, still have a basis upon which to bring claims against their sending bank if the breach of duty relates to the sending bank's failure to take adequate steps to recover monies paid by the account holder once notified that such payment was induced by fraud. 

• The position remains that the sending bank's general duty to act with reasonable skill and care when processing account holder's payments will arise only in the circumstance where there are questions as to the validity of the executed payment. 

• Any claim based on the 'retrieval duty' is limited to a claim for the loss of a chance of recovering the monies paid through fraud inducement. 

• In respect of the contingent reimbursement model (CRM) code, the court confirmed that the scope of the code is limited to payments between UK-domiciled accounts and those that are GBP-nominated, and the payments in question were made to US-dollar and euro-nominated accounts. It therefore dismissed a claim based on a breach of the CRM code. The court also concluded that it did not need to consider the submission of Starling that "the voluntary nature of the CRM code meant there was no legal basis upon which it might create an additional duty owed by banks to individual customers."

While the Court of Appeal granted the claimant permission to appeal, it is understood that the claimant has discontinued their claim.

PSR Panel annual report 2024/25

On 4 September 2025, the Payment Systems Regulator (PSR) Panel published its 10th annual report covering the period 1 April 2024 – 31 May 2025.

The Panel is established by the PSR under the Financial Services (Banking Reform) Act 2013 (FSBRA) to represent interests of participants in regulated payment systems and those who use, or are likely to use, services provided by regulated payment systems.

The Panel:

• provides feedback on the PSR’s work

• brings forward relevant issues for discussion

• identifies areas for research

• considers how best the PSR can meet its objectives.

During 2024/25, in addition to providing input into the National Payments Vision, the Panel discussed a number of key policy issues:

• APP scams and reimbursement

• Variable recurring payments

• Cross-border interchange fees

• Card-acquiring market review

• PSR's compliance monitoring framework

• New payments architecture.

The Panel notes that the National Payments Vision and the consolidation of the PSR into the FCA will "… clearly impact the work of the Panel from now on."

EU payments update

EU institutions negotiate revised payments legislation

Dubbed by many as an 'evolution' rather than a 'revolution', the reforms to the EU payments legislative framework have reached the trialogue negotiation stage, following the approval in June 2025 of the Council of the EU's position. In this special article, we explore some of the provisions which are likely to feature prominently in the inter-institutional dialogue.

EBA speech on regulation and the EU payments market

On 25 September 2025, François-Louis Michaud, the Executive Director of the European Banking Authority (EBA) delivered a speech at the Payments Tomorrow 2025 conference in Paris. He outlined how past and forthcoming EU payments rules are shaping innovation, competition and security, including the impact of PSD2, the Instant Payments Regulation, and the legislative trajectory for PSD3 and PSR (see our item above) and FIDA.

Michaud noted that the EBA and European Central Bank are planning to a publish a report on payment fraud by the end of the year, which he described as "the most comprehensive view so far on fraud in general, and on the effectiveness of SCA in particular." The report may inform future policy work.

HMT publishes consultation and call for evidence on commercial credit data sharing improvements

On 25 September 2025, HM Treasury (HMT) published a consultation and call for evidence on reforms to the Commercial Credit Data Sharing (CCDS) scheme. 

The CCDS scheme dates back to 2013 and requires major lenders (banks designated by HMT) to share credit information on their small and medium-sized business customers (SMEs) with credit reference agencies (CRAs) (also designated by HMT), in order to improve access to finance. It operates under the Small and Medium Sized Business (Credit Information) Regulations 2015.

Among the proposals are:

• implementing a standard data format that is used by all participants across the industry

• amending the legislation to require data to be provided at a specific point in time, rather than within windows of time

• amending the legislation to deal with SMEs transitioning in and out of the scheme and the scope of SMEs to which the scheme applies 

• expanding designations to finance providers that are not designated banks

• requiring designated banks to obtain consent from legacy SME customers

• excluding certain products if they are not considered to be valuable for enhancing access to credit for SMEs. An example of such a product is a 'stocking loan' – the facility type is not common, and the reporting is cumbersome and time intensive.

HMT is also seeking evidence in relation to a number of topics including whether CRAs should set up online data amendment portals, which would make it easier to amend data, and whether changes are needed to improve the quality/understandability of information an SME receives on its credit file, and the accessibility of the file.

The consultation and call for evidence closes on 20 November 2025.

FCA launces £1 million motor finance compensation awareness campaign

On 12 September 2025, the FCA announced that the regulator intends to launch a £1 million campaign to raise awareness of the motor finance compensation scheme.

The campaign is intended to inform customers that the proposed industry-wide compensation scheme can be accessed directly, and intermediary engagement of claims management companies or law firms will not be required.

The FCA intends to launch a consultation on the compensation scheme in early October 2025, with expectations that first payments from the compensation scheme will be made in 2026.

FCA writes to Chancellor on application of the Consumer Duty to wholesale firms

On 30 September 2025, the FCA published a letter it has sent to the Chancellor of the Exchequer, Rachel Reeves, on the application of the Consumer Duty to wholesale firms.  The FCA's work in this area relates to one of the July 2025 Mansion House commitments aimed at cutting back on excessive regulation.

Following extensive engagement with firms during which the FCA heard firms' concerns regarding the role of the Duty, the FCA has drawn up an action plan for HM Treasury to consider.

This year it will:

• provide more clarity on its supervisory approach and expectations under the Duty when firms work together to manufacture products for retail customers
• consult on plans to update the client categorisation framework. It notes that there is sub-category of investors who have the knowledge, experience, sophistication or resources that mean they do not need retail protections. The FCA is considering setting clearer standards for firms to identify individuals that can be treated as professional clients. Alongside this it is looking at the possibility of a new test at a high threshold of assets. To bring more clarity and industry and reduce inconsistencies, it also suggests that HMT may wish to consider modernising the exemptions in the Financial Promotion Order and the Promotion of Collective Investment Schemes Order.

In H1 2026 it will:

• consult on changes to rules on the application and requirements of the Duty, including through distribution chains
• propose to remove business with non-UK customers from the scope of the Duty.

FCA webpages on Consumer Duty work

On 30 September 2025, the FCA published two webpages on its Consumer Duty work relating to its focus areas for 2025/26 and its review of the Consumer Duty requirements.

Its priorities for 2025/26 relate to:

• embedding the Consumer Duty and sharing good practice
• vulnerability and data protection
• supporting firms to deliver good outcomes under the price and value outcome
• sector-specific priorities.

Its review of Consumer Duty requirements has focused on streamlining its rules and reducing complexity for businesses following the introduction of the Consumer Duty.  The webpage provides feedback on a Regulatory Summit it held in July and the status of the action plan that it set out in FS25/2. 

The FCA has decided not to proceed with wider reviews of its product governance, client asset and training and competence sourcebooks. It will keep this under review. It will deliver focused work this year on its Systems and Controls requirements relating to the management of conflicts of interests and will be progressing reforms to the senior manager regime.

FCA talks about its ongoing work on the Consumer Duty

Charlotte Clark, Director of Cross-Cutting Policy and Strategy at the FCA, has taken part in a recent 'Following the Rules' podcast. Clark spoke about:

• the positive impact of the Duty to date

• the FCA's work to streamline its rules

• plans to respond to the Chancellor about how the Duty is impacting wholesale firms.

Publication of translations of ESMA guidelines on outsourcing to cloud service providers

On 30 September 2025, the European Securities and Markets Authority (ESMA) published translations of its guidelines on outsourcing to cloud service providers. The guidelines, which took effect on 30 September, apply to non-DORA depositaries. The publication of the translations triggers the two-month period during which national competent authorities must notify ESMA whether they comply or intend to comply with the guidelines.

Financial Policy Committee highlights importance of collective action for building resilience to systemic risks

On 18 September 2025, the Bank of England published a speech given by Liz Oakes, the external member of the Financial Policy Committee, which highlighted the importance of collective action initiatives, such as the Cross Market Operational Resilience Group (CMORG), as a tool for building operational resilience to systematic risks to protect financial stability.

Key insights from the speech include:

• Operational risks are not confined to cyber-focused threats but include wider system management within organisations, with poor management of systems during a period of system change representing a significant operational risk with potential impacts on financial stability.

• External cyberattack threats as well as mis- and dis-information is increasing, with approximately 4% of listed firms across advanced economies experiencing a cyber incident in 2023, with the proportion increasing to 25% amongst financial firms alone. 

• Cross-industry collective action is a crucial tool to strengthen system-level operational resilience and in the event of disruption, rebuild trust in the integrity of the financial system. 

• The Bank of England believes that firms and the regulators have a shared responsibility to 'think system-wide' to prevent incidents and minimise the impact in their aftermath. 

Oakes concluded that the Bank of England and the PRA intend to consult on policy relating to the management of ICT and cyber risks in late 2025, with a view to enhancing the financial services sector operational resilience capabilities.

Application of AI in EU banking and payments sector

On 25 September 2025, the European Banking Authority published a factsheet setting out some of the use cases and market trends it has observed in relation to the use of AI in the EU banking and payments sector. The factsheet includes some observations on the use of general-purpose AI and agentic AI in consumer-facing scenarios.

Treasury Committee sends letter to AI providers

On 17 September 2025, the Treasury Committee, as part of its inquiry on the use of AI in the UK financial services industry, published a letter it had sent to a number of AI providers.

The questions include the following: 

• What impact will AI have on financial services?

• Does your firm have a specific strategy for AI in financial services?

• What preparations does your firm have in place for failures or outages in its cloud system and any AI systems it hosts?

• Does your firm have systems in place to check or audit the outputs of its AI models?

• The Committee has received evidence warning that AI decision-making lacks transparency, potentially impacting consumers in financial services. How does your firm ensure transparency in the decision-making of its AI models?

• The Committee has received evidence warning that AI decision-making lacks transparency, potentially impacting consumers in financial services. How does your firm ensure transparency in the decision-making of its AI models?

• The Bank of England and the FCA take a 'technology-agnostic' approach to AI regulation and supervision, meaning that they do not usually require or prohibit specific technologies. Do you agree with this approach?

• The Artificial Intelligence (Regulation) Bill, a Private Member’s Bill in the House of Lords, proposes establishing a dedicated AI regulator and requiring firms using or developing AI to designate an AI officer, among other changes. How would these proposals impact your firm, if implemented?

• What recommendations, if any, does your firm have for AI regulation and supervision in the UK?

The deadline for responses was 1 October 2025 and these will be published as part of the inquiry.

FCA fines and bans bond traders for market manipulation following decision of the Upper Tribunal

On 12 September 2025, the FCA published the final notices issued to three bond traders on 11 August 2025. The three individuals are now banned from performing any functions connected to regulated activity and has imposed individual fines of £223,400, £100,00 and £57,600 on Mr Urra, Mr Lopez Gonzalez and Mr Sheth respectively.

The notices were published following the upholding of the FCA's decision to ban the individuals by the Upper Tribunal.

Finfluencers plead not guilty to financial promotion offences

On 10 September 2025, the FCA issued a press release detailing that three individuals, often referred to as 'finfluencers' appeared before Westminster Magistrates' Court each charged with a single count of communicating an invitation to engage in investment activity in contravention of section 21(1) of the Financial Services and Markets Act 2000.

It is alleged that the three individuals encouraged their social media followers to invest in foreign exchange trading through high-risk contracts for difference without having the required authorisation.

The charges follow an international campaign against finfluencers that use illegal financial promotions, which the FCA announced in June 2025.

The press release issued by the FCA details that all three individuals pleaded not guilty and will appear at Southwark Crown Court on 8 October 2025.

OFSI publishes annual frozen assets reporting notice for 2025

On 11 September 2025, the Office of Financial Sanctions Implementation published its annual frozen assets reporting notice for 2025. The notice outlines the annual reporting obligations under UK financial sanctions legislation. 

All persons that hold or control funds or economic resources owned, held, or controlled by a designated person must provide a report to the OFSI setting out the details of the relevant assets by 30 November 2025. 

FCA outlines strategy to tackle financial crime

On 11 September, the FCA published a speech delivered by Steve Smart, the FCA's joint executive director of enforcement and market oversight, setting out the regulator's strategy for tackling financial crime, with Smart highlighting that tackling financial crime is a priority for the FCA and necessary to ensure the growth of UK economy. 

Smart outlined several ways in which the FCA is and will tackle financial crime: 

• NECC’s Data Fusion Project allows for the identification of disruption of organised criminals operating within the financial sector through the linking of bank transaction data with crime intelligence. 

• FCA support of the ECCTA (Economic Crime and Corporate Transparency Act) which promotes better information sharing between firms on economic crimes. 

• Planned introduction of an AML Synthetic Data sprint to foster collaboration with firms with the aim of establishing innovative methods for the detection of money laundering. 

• Closer co-operation and co-ordination with international partners.

Wolfsberg Group publishes guidance on the providing of banking services to fiat-backed stablecoin issuers

On 8 September 2025, the Wolfsberg Group published guidance for those providing banking services to fiat-backed stablecoin issuers. The guidance provides a framework for managing the increasing financial crime risks presented by the provision of banking services to fiat-backed stablecoin issuers. 

Key points of the guidance include:

• Terminology used in relation to stablecoins differs across the industry and a shared understanding of the basic terms is required to develop an overarching risk management framework. 

• Existing financial crime-related controls will be applicable but may require tailoring to mitigate the financial crime risks presented by the typical fiat-based being provided to a stablecoin issuer. Examples include engagement with the senior management of the issuer on financial crime risk management procedures, establishing the source and flow of funds for accounts, and establishing the jurisdictions where the issuer is established.

• The financial institution should assess how the issuer’s financial crime risk management programme integrates with the financial institutions own risk management and oversight approach, including, for example, the process for ensuring the issuer responds adequately to requests for information. An evaluation of the issuer's financial crime risk management programme is crucial to assess whether it aligns with risk management and oversight approach of the financial institution. 

• The guidance recommends unique approaches for risk monitoring depending on whether the accounts held are classified as operating accounts, reserve management accounts or client settlement accounts.

• Assessment of risk and the approach to compliance monitoring should be focused on whether the issuer is operating within its own risk appetite rather than risk being assessed according to degrees of transactions on the blockchain since issuance.

HM Treasury and Home Office publishes the outcomes progress report for the Economic Crime Plan 2

On 2 September 2025, the HM Treasury and the Home Office published the Economic Crime Plan 2: outcomes progress report. The Economic Crime Plan 2 (ECP2), published in March 2023, set out how the public and private sectors would cut economic crime, protect national security, and support the UK's legitimate economic growth and competitiveness. It focused on achieving tangible outcomes and measuring progress and performance across the system.

The progress report summarises key insights from the priority outcomes and indicators being monitored as part of the outcomes framework under Action 43 within ECP2, including:

• Criminal justice outcomes for money laundering: in the year ending December 2024, there were 6,845 prosecutions and 3,756 convictions for the combined number of principal and non-principal money laundering offences in England and Wales. This is a 36% increase in prosecutions and 7% increase in convictions from the previous year.

• Law enforcement disruptions: in the financial year ending 2024, there were 2,050 system-wide disruptions for illicit finance, a 3% increase over the previous year, and 2,862 system-wide disruptions for fraud, a 54% increase on the previous year.

• Contributions of SARs to asset recover: suspicious activity reports (SARs) contributed to asset denials totaling £230.4 million in 2023, representing 36% of the total value of assets denied.

• Companies House Reform: as of March 2025, 32,000 entities registered on the Register of Overseas Entities, enhancing transparency and reducing hidden foreign ownership. 

• Number of regulated crypto firms: as of 12 May 2025, the FCA received 372 applications from cryptoasset companies to join the FCA’s AML/CFT regime. Of the 359 applications with outcomes, 14% were registered, 70% have been withdrawn and 4% refused. Twelve percent of cases were rejected due to insufficient documentation being supplied, which prevented the FCA being able to assess these applications.

• Fraud and Sanctions: The Crime Survey of England and Wales estimated that there were 4.16 million fraud offences in the year ending March 2025, a 31% increase from the previous year. 

The report concludes that, while data obtained for individual indicators showed positive trends, for a full ECP2 outcomes progress assessment, further data development is crucial to more accurately measure outcomes and assess progress within key indicators.

An update to capture further data development activities will be published by 2027.

The answer to last month's question: the term, Open Finance, refers to the extension of open banking-like data sharing and third-party access to a wider range of financial sectors and products.

This month's question: According to the FCA's most recent consumer survey research, what percentage of UK consumers choose to use centralised exchanges when purchasing cryptoassets?

• 13%

• 15%

• 69%

• 26%.