Welcome to the latest edition of Financial Services Matters. This month's highlights include an update from the FCA on the Leeds Reforms, the latest on the UK's new cryptoasset regulatory regime, a review of the work of the Payment Systems Regulator, and the FCA's final rules for BNPL.

• General
• Digital assets
• Payment services and systems
• Consumer credit and mortgages
• AI
• Operational resilience
• Enforcement
• Financial crime
• This month's question

General

Financial Stability Board publishes 2026 work programme 

On 3 February 2026, the Financial Stability Board (FSB) published its Work Programme for 2026 (Work Programme).

Key ongoing and planned FSB initiatives to note include:

The Annex to the Work Programme provides an indicative timeline for the initiatives as well as key dates for publication and events relevant to the implementation of the 2026 work programme. 

FCA regulation round-up – January 2026

On 29 January 2026, the FCA published its January 2026 regulation round-up. Items of note not covered elsewhere in our update include:

• Firm Checker. The FCA is calling on firms to include its Firm Checker tool on consumer facing webpages rather than the FCA Register. The Firm Checker was launched in December 2025 to help consumers avoid scams.
• T+1 settlement: On 26 January 2026, the FCA published a statement in which it welcomed the Q4 2025 progress report of the Accelerated Settlement Taskforce (AST). The AST recommended that the UK should commit to moving to a T+1 standard settlement cycle at the latest by the end of 2027.
• The Berne Financial Services Agreement took effect on 1 January 2026.This market access agreement between the UK and Switzerland allows firms to undertake specified wholesale activities on a cross-border basis in each other's country. The FCA has received the first notifications from both UK and Swiss firms.

FCA response to Treasury Committee on Leeds Reforms

On 28 January 2026, the House of Commons Treasury Committee published correspondence it had received from the FCA, setting out further information relating to:

• outstanding elements of the 2025 Leeds Reforms. The FCA notes that the government's Financial Services Growth and Competitiveness Strategy (which includes the Leeds Reforms) contains around 30 initiatives that the FCA is taking forward, either alone or in conjunction with others. The FCA has fulfilled 9 of these so far, including reviewing the application of the Consumer Duty to wholesale firms and its consultation on client categorisation. Among its immediate priorities are engaging with industry on the provisional licensing regime, speeding up approvals for firms and individuals (the FCA will report on new voluntary targets for such processes from this month), modernising the redress system, and publishing its roadmap for open finance.

• where the FCA needs legislation or assistance from HM Treasury to fully implement initiatives. The FCA's letter emphasises that legislation is often a key dependency in making reforms, referring to the Senior Managers and Certification Regime, wider changes to the redress system, Buy Now Pay Later, secondary legislation under the Data Use and Access Act. It also calls for reforms to the Financial Promotion Order, the Economic Crime and Corporate Transparency Act, the Online Safety Act and the Payments and E-money Special Administration Regime.

Implementation of Basel 3.1 in the UK

On 20 January 2026, the Prudential Regulation Authority (PRA) published a policy statement, PS1/26, setting out its final policy, rules and supervisory expectations relating to the Basel 3.1 standards and building on earlier policy statements.

Basel 3.1 is being implemented in the UK through a combination of legislation and regulatory rules. 

The key areas covered by PS1/26 are:

• own funds
• the standardised approach to credit risk
• the internal ratings based (IRB) approach to credit risk
• credit risk mitigation (CRM)
• operational risk
• reporting and disclosure templates and instructions
• market risk including confirmation of the timing of the application of a new internal model approach for market risk
• capitalisation of FX positions for market risk.

PS1/26 comes into force on 1 January 2027, except the requirements relating to the internal model approach for market risk, which will come into effect on 1 January 2028.

Targeted support legislation

On 30 January 2026, the Financial Services and Markets Act 2000 (Regulated Activities) (Providing Targeted Support) (Amendment) Order 2026 (Order) was published alongside an explanatory memorandum. The legislation amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to create a new regulated activity of providing targeted support, which is distinguished from the activity of advising on investments; recommendations made by way of targeted support are not treated as investment advice.

The Order comes into force on 6 April 2026 except for the provisions which give the FCA and the Financial Ombudsman Service (FOS) powers to make rules and guidance, and enable the FCA to authorise firms for the new permission of targeted supported, which come into force on 23 February 2026. Further legislative changes are expected to be introduced later in the year – the government has confirmed that these changes will not include adding target support to the activities that an appointed representative may undertake.

In December 2025, the FCA published near-final rules for targeted support, as well as joint statements with the FOS and the Information Commissioner's Office. The FCA is expected to accept applications for the new permission of targeted support from March 2026.

The new regime for targeted support follows the joint FCA and HMT advice guidance boundary review, which responds to an increasing concern that the majority of customers in the UK are not getting the financial help they need.

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Digital assets

House of Lords Financial Services Regulation Committee: stablecoin inquiry

On 29 January 2026, the House of Lords Financial Services Regulation Committee announced the launch of an inquiry on the growth and proposed regulation of stablecoins in the UK.

The inquiry will consider the benefits and risks for the UK financial services sector and the wider economy associated with the growth of stablecoins, what the UK can learn from other jurisdictions such as the US and EU, and assess whether the Bank of England and FCA's proposed regulated frameworks "provide measured and proportionate responses."

The deadline for submissions is 11 March 2026.

The future of digital finance

In a speech delivered on 29 January 2026 at a conference on tokenisation, Sasha Mills, Executive Director of Financial Market Infrastructure at the Bank of England, set out the innovation priorities for the coming year, which are:

• progressing the Bank's regime for systemic stablecoins
• clarifying the treatment of tokenised collateral under the UK European Market Infrastructure Regulation
• expanding the Digital Securities Sandbox.

Taylor Wessing moderated a panel at the conference on the tokenisation of real world assets.

UK crypto regime update

On 23 January 2026, FCA published the second of two consultations on the application of the FCA Handbook for regulated activities (CP26/4). For more information on CP26/4, which closes for comments on 13 March 2026, see our article for further information.

The FCA announced on 29 January 2026 that the application period for firms that want to undertake the new cryptoasset regulated activities (referred as to the 'gateway') will be open from 30 September 2026 to 28 February 2027.

On 4 February 2026, the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 were published, together with an explanatory memorandum and an impact assessment, following the conclusion of parliament's approval procedure on 2 February 2026.

Most provisions apply from Monday 25 October 2027 except those that give the FCA powers to make rules and guidance (including for the new designated activities) and allow it to accept applications, which come into force at the end of 21 days from 5 February 2026.

In its first webinar on the new regime delivered on the 29 January 2026, the FCA provided an overall timeline of key milestones and what firms should be doing to prepare for the new regime.

View key milestones

It also explained how savings and transitional provisions in the legislation will operate – see also the FCA's crypto gateway webpage.

EU Commission commences crypto infringement proceedings

On 30 January 2026, the EU Commission confirmed it had sent formal notices to 12 Member States for failing to fully transpose Directive (EU) 2023/2226, which made amendments to EU Directive 2011/16 on administrative cooperation to enable tax transparency and information exchange regarding crypto-assets, and to enhance the information exchanges regarding financial accounts. The Member States have two months to respond, complete their transposition of notify the Commission. If the Commission does not receive a satisfactory response, it may send a 'reasoned opinion', which is a formal request to comply with EU law.

The Member States are: Belgium, Bulgaria, Czechia, Estonia, Greece, Spain, Cyprus, Luxembourg, Malta, the Netherlands, Poland and Portugal.

The Commission has also confirmed that it has begun an infringement procedure against Hungary for failing to fully comply with the EU Markets in Crypto-Assets Regulation (MiCA). Hungary has introduced a new authorisation regime for ‘exchange validation services' with criminal liability, which is not provided for under MiCA. It has been reported that this has led to market disruption. Hungary has two months to respond and address the Commission's concerns. If the Commission does not receive a satisfactory response, it may send a reasoned opinion.

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Payment services and systems

FCA update on establishment of a Future Entity

On 6 February 2026, the FCA provided an update to trade associations on the development of a Future Entity for open banking. The Future Entity will replace Open Banking Limited and be responsible for the future development of open banking standards and guidelines for all open banking ecosystem participants.

The FCA confirmed in the update that KPMG has been appointed to provide an independent assessment of proposals from organisations proposing to lead the establishment of a standards-setting body for UK open banking APIs that could become the Future Entity.

The assessment is intended to identify the organisation best placed to take forward the establishment of the standards-setting body. Firms are encouraged to share their analysis and evaluations as part of the consultancy process. The recommendation will not be binding but is intended to support decision making ahead of the Open Banking statutory instrument being laid before Parliament in late 2026.

KPMG is expected to engage with trade associations and stakeholders in late February 2026 to provide details of its approach.

The FCA will not participate in or influence the evaluation of the proposals but will provide oversight of the engagement process. On completion of the assessment, the FCA will review the recommendation of KPMG.

KPMG expects to share the outcome of their assessment in early April 2026. From April 2026, industry and regulators will consider the recommendation of KPMG and collaborate to progress establishment activity. Significant progress on establishment is expected by the end of 2026 to support implementation of the statutory framework.

Treasury Select Committee hearing on the work of the Payment Systems Regulator

On 4 February 2026, the Managing Director of the PSR, David Geale, gave evidence to the Treasury Select Committee on the work of the Payment Systems Regulator (PSR).

The questions posed to Mr Geale provided an opportunity for him to give a comprehensive overview of the most important topics relating to the regulation of the payments industry.

• Consolidation of the PSR into the FCA. Geale said that he anticipated that the likely timing for primary legislation would be no earlier than the end of Q1 2027. However a number of PSR staff have already been transferred to the FCA and this process is ongoing with the final moves expected by the end of March/April. Geale said there were potential benefits to how the PSR regulates payment systems from the scale of the FCA and its wider information gathering powers. He said that the budget for the PSR, currently £28 million, is expected to be lower and fees to the industry are expected to go down by a "double digit" percentage.
• Authorised push payment (APP) fraud. While Geale acknowledged that this was a difficult policy decision for the PSR to take, he felt that the APP fraud reimbursement scheme had already delivered clear benefits. He noted that there is an independent review of the reimbursement scheme taking place this year and there are ongoing investigations (see Supervision below).
• APP fraud data. For in-scope claims, the PSR has seen 97% by volume are being paid out. 82% are being paid out within 5 working days and 98% within 35 working days. £173 million has been returned to consumers in the first year of the scheme, which amounts to 88% of the value the victims have lost. 99.8% of claims are under the £85,000 limit, which Geale feels justifies the PSR's decision to lower the limit. The PSR has also seen around a 33% drop in APP fraud within the scope of the policy, which Geale felt was driven by improved warnings to customers and Confirmation of Payee (which is now across 99% of payments), and the allocation of 50% from the receiving bank.
• Social media. On the role of social media in APP fraud, Geale indicated his support for changing the behaviour of UK tech companies so that they are more proactive in tackling fraud enabled by social media and said there was potential for a "more complex model" for allocating the cost of reimbursements in the future that is able to take into account the point of origination of the fraud.
• Cross-border interchange fee legal challenge (see below). The Committee noted the PSR's recent legal success in relation to its powers to cap cross-border interchange fees. Subject to any further legal challenge, the PSR is progressing its work on the 'merchant indifference test' (MIT) for determining a permanent cap for cross-border interchange fees. Geale said that the PSR intends to complete the work on MIT this year, after which it will consult on the level of a cap. A cap is not likely to be introduced before 2027.
• Scheme and processing fees. The PSR has undertaken a market study and is consulting on three remedies: information transparency and complexity, pricing and governance, and regulatory financial reporting (this had been paused but is to be picked up in the spring) – see our January 2026 edition for further details. 
• Open banking. Geale highlighted the importance to competition of Open Banking and the acceleration of account-to-account payments, noting a 49% year-on-year growth in Open Banking with 16.5 million active users and almost 8% of Faster Payments arising from variable recurring payments (VRPs) through Open Banking. He described the established of the UK Payments Initiative as a "significant step" and referred to the FCA and PSR's 'non-prioritisation' letter (see below). The PSR is expecting a number of the major institutions to be making VRPs this year.
• Digital wallets. The PSR is "staying very close" to the work of the Competition and Markets Authority on digital wallets, following the FCA and PSR's study on their use. 
• Beyond open banking. Geale cited other initiatives such as tokenised deposits, which also offer potential alternatives to card payments.
• National Payments Vision. The head of the PSR confirmed that the existing infrastructure would still be needed for a period of time – the recent contract renewal between Pay.UK and Vocalink achieved this. He said that the composition of the Payments Vision Delivery Committee would enable it to push the strategy in the right way and that the work of the Retail Payments Infrastructure Board will be critical in driving the private-public partnership and that it is due to set out the plans for what is coming and when in Q1 2026. 
• Supervision. There has been a growing focus on supervision in recent years. Although supervision has always played a role in the PSR's work, it has evolved given the growing number of directions in place and is a tool that the PSR uses to remedy some instances of non-compliance. In the card acquiring market review, the PSR used its supervisory exercises to achieve the re-write of around 700 contracts that it considered were non-compliant with the rules; there are also two live enforcement cases in this area. On APP fraud, it has looked very closely at "outliers" and has investigations ongoing. Geale nonetheless recognised the need to enhance the PSR's current supervisory approach and that the consolidation with the FCA could support this.
• Modernising payments legislation. Geale highlighted the importance of reviewing the current legislative landscape for payments, observing that there may be more complexity than is necessary (one example being how Strong Customer Authentication is performed) and that there are opportunities to modernise payments regulation so that different standards may apply to different types of payment firms, and to enable innovation.

A number of these themes were also reflected in Geale's remarks at a payments conference on 2 February 2026. 

On APP fraud, the PSR has a webpage with comprehensive data for Q3 2025, which was updated on 30 January 2026.

Bank of England speech on review of retail payments infrastructure

Sarah Breeden, Deputy Governor of the Bank of England (BoE) for Financial Stability, delivered a speech about the "UK's next-generation retail payments infrastructure" at a payments conference on 2 February 2026.

The speech focused on three major improvements that the UK regulators want the future infrastructure to deliver:

• An account-to-account payment option in-store and online. This would foster competition, improve functionality, and potentially lower the cost to merchants for accepting payments.
• The "seamless exchange" of both traditional and tokenised money. Breeden emphasised that BoE's support for a 'multi-money' system where customers can choose between traditional bank deposits, tokenised deposits, digital money, and (potentially) a Central Bank Digital Currency.
• Enhanced cross-border retail payments. Breeden noted that achieving cheaper and faster cross-border payments has been a priority for the G20 countries for a number of years. While there has been progress, more needs to be done including implementing international messaging standards (ISO 20022).

FCA and PSR give clarity on open banking pricing models

On 20 January 2026, the FCA issued a joint statement with the PSR on open banking pricing models, specifically commercial variable recurring payments (cVRPs).

• The UK Payments Initiative (UKPI) is developing a centralised 'access fee' pricing model for cVRPs.

• The statement confirms that the FCA and PSR will not, at this stage, prioritise investigations under Chapter I of the Competition Act 1998 in relation to specific pricing arrangements concerning UKPI's cVRP scheme.
• The statement notes that the Competition and Markets Authority does not intend to take a different position on prioritisation to that of the FCA and PSR.

• The priority decision is a temporary measure, which will be in place until July 2027 or until a legislative framework under Data (Use and Access) Act 2025 or another legislative mechanism is put in place, whichever is earlier. 
• During the period in which the priority decision is in operation, the FCA and PSR will continue to monitor market developments and review any changes to the pricing methodology. 
• The statement explains in more detail how the central access fee model works.

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Consumer credit and mortgages

FCA publishes final BNPL rules

On 11 February 2026, the FCA published a policy statement (PS26/1) confirming the final rules for the regulation of Buy Now Pay Later products (BNPL). This follows the publication of the final legislation and a consultation paper last summer – see our article for further details.

Key points on the new regime:

• BNPL (to be known as Deferred Payment Credit) will become regulated from 15 July 2026.
• In-scope: lenders who offer a DPC agreement to finance the purchase of goods or services from a merchant.
• Not in-scope: merchants that offer their own DPC agreements directly, nor the broking of DPC agreements.
• Firms undertaking DPC activity that do not currently have consumer credit permissions will need to become authorised and will become subject to the FCA's Consumer Duty, and a suite of rules and guidance including consumer credit conduct rules, information requirements, and affordability checks. Consumers will be able to complain to the Financial Ombudsman Service. 
• In response to feedback to its consultation, the FCA will not require firms to include the following in their 'key product information': the existence of any rights to withdraw from or cancel the agreement, to complete payments ahead of time, and to refer a complaint to the Financial Ombudsman.  In addition, firms will not need to include an adequate explanation of what a continuous payment authority is and how it works.  However all of this information will be required to be provided in 'additional product information', which firms must either give, or make available, to a consumer before the DPC agreement is entered into.
• Firms that wish to continue DPC lending after 15 July 2026 must notify the FCA to benefit from its Temporary Permissions Regime (TPR).
• The window for TPR registration will begin on 15 May 2026, two months before the regime begins and close on 1 July 2026. The FCA will publish details on the process in due course.
• The FCA will provide pre-application support to these firms to help them get ready.
• There will be a 6-month window from 15 July 2026, during which firms that have entered the TPR will be able to apply for authorisation.
• Any firm that does not currently hold the required consumer credit permissions and does not register for the TPR will not be permitted to enter into new DPC agreements after 15 July 2026 (it will be a criminal offence to do so) but will be able to service DPC agreements taken out prior to 15 July 2026.

Motor finance update

Recap

There is a currently a pause in place in relation to the handling of motor finance commission complaints, which is scheduled to end in May 2026. The FCA has also consulted on a motor finance consumer redress scheme and is considering the responses to its consultation. It will publish final scheme rules by the end of March 2026.

Multiple representatives

On 4 February 2026, the FCA published a 'Dear CEO letter' to motor finance lenders as a result of having seen multiple representatives for the same motor finance claim.

Where there are multiple representatives for the same complaint, this may increase the risk of unnecessary termination fees (a fee charged by the solicitor or claims management company). There is also an inherent risk of delaying resolution of these complaints in a timely and efficient way.

The letter sets out what steps lenders should take:

• Lenders must identify where there is more than one representative for the same complaint and it is not clear who is acting for the customer.
• Contact all professional representatives (PRs) associated with a complaint that has multiple representation to explain the issue and to establish who is the sole representative, with all correspondence copied to the customer.
• Provide all PRs associated with a complaint and the customer with sufficient information for them to reach a clear view on who is the sole representative.
• Communications should support constructive engagement between PRs and help customers understand the implications of appointing more than one representative, including any potential termination fees.
• Inform all parties and close any duplicate complaints, once the sole representative is confirmed.
• If, despite these reasonable efforts, the sole representative still cannot be identified, then the lender should ask the customer what they wish to do.

Throughout their communications, lenders must take care to ensure any information shared is limited to what is necessary to resolve professional representation status, observing applicable legal and data protection requirements.

The FCA and SRA have also warned claims management companies and law firms involved in motor finance claims to ensure clients do not have multiple representatives for the same claim and are not charged excessive termination fees. 

In their joint statement, the FCA explained that it has used Consumer Rights Act 2015 powers to obtain and review contracts and information from a sample of SRA-regulated representatives. This review showed wide fee variation. In addition to compliance with consumer protection law, FCA regulated representatives are required to comply with the Consumer Duty and claims management rules in the Claims Management Conduct of Business Sourcebook. The SRA also has applicable regulatory requirements. Where there is evidence of misconduct or the unfair treatment of clients, the regulators have taken action and will continue to do so.

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AI

FCA review into long-term impact of AI on retail financial services

On 27 January 2026, the FCA announced the launch of a review into the implications of advanced AI on consumers, retail financial markets and regulators.

The Mills Review (named after Sheldon Mills, Executive Director, FCA, who will lead the review) seeks views on:

• how AI could evolve in the future, including the development of more autonomous and agentic systems
• how these developments could affect markets and firms, including changes to competition and market structure and UK competitiveness
• the impact on consumers, including how consumers will be influenced by AI but also influence financial markets through new expectations
• how financial regulators may need to evolve to continue ensuring that retail financial markets work well.

Responses should be submitted by 24 February 2026.

Mills will report to the FCA Board in the summer and set out recommendations to assist the FCA in its role in shaping AI-enabled financial services. An external publication will follow at a later date.

The launch of the Mills Review comes a week after the publication by the Treasury Select Committee of its report on AI in financial services (see below).

Treasury Select Committee report on AI in financial services

On 20 January 2026, the Treasury Select Committee published its report on AI in financial services. The report criticises what is characterised as a "wait-and-see" approach from regulators and government, concluding that they "are exposing customers and the financial system to potentially serious harm."

Recommendations include practical guidance from the FCA by the end of 2026 on the application of consumer protection rules to firms' use of AI, and expectations of senior managers under the SMCR.

AI champions for financial services

On 20 January 2026, the government announced the appointment of two AI champions for financial services, Harriet Rees from Starling Bank and Dr Rohit Dhawan from Lloyds Banking Group.

In addition to identifying areas of potential growth for AI in financial services, part of their role will be to help "to ensure the UK’s policy, regulatory, and investment environment is fit for purpose as AI becomes an increasingly important in global competition."

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Operational resilience

Financial regulators publish 2025 CBEST thematic

On 21 January 2026, the Bank of England, the PRA and the FCA published their 2025 findings of cybersecurity assessments conducted across firms and financial market infrastructures (FMIs) (referred to as the 'CBEST thematic'). The CBEST thematic is intended to highlight gaps in cyber resilience. It draws on 13 assessments undertaken in 2025. The findings are categorised into five cyber security areas:

• infrastructure security and data security
• identity management and access control
• detection and response
• network security
• staff culture, awareness and training.

The CBEST thematic lists a number of weaknesses identified, including:

• firms/FMIs not maintaining strong configuration practices
• firms/FMIs with weak cryptographic protections
• firms/FMIs that did not maintain robust identity and access management control such as credentials or weak passwords
• firms/FMIs with insufficient detection capabilities and ineffective network monitoring
• vulnerability of staff within firms/FMIs who were susceptible to social engineering attacks
• firms/FMIs in which users were using unprotected facilities for storing credentials such as spreadsheets or open file shares and firms/FMIs with insecure protocols for helpdesks.

The regulators note that boards can use the CBEST thematic to inform "their challenge and oversight discussions with cyber resilience leaders."

UK regulators sign memorandum of understanding with ESAs

On 14 January 2026, the three European Supervisory Authorities (ESAs) (the EBA, EIOPA and ESMA) published a memorandum of understanding with the FCA, the PRA and the Bank of England (BoE) on co-operation, exchange of information and co-ordination of oversight activities of critical ICT third-party service providers located in the EU and the UK (MoU).

The FCA and BoE published a statement on the MoU, noting that they are continue to work with HM Treasury on the designation of UK critical third parties.

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Enforcement

FCA begins legal proceedings against global crypto exchange

On 10 February 2026, the FCA announced that it had started legal proceedings against global crypto exchange HTX (formerly Huobi) for illegally promoting cryptoasset services to UK customers.  This is the first enforcement action the FCA has taken against a crypto firm for the illegal marketing of products to UK customers.

HTX received previous warnings regarding illegal promotion of crypto services to UK consumers but has continued to publish financial promotions on its website and social media platforms, in breach of the crypto promotion rules, which came into force in October 2023.

The FCA notes that since issuing the proceedings, HTX has taken steps to restrict new UK customers from registering an account but existing UK customers can still log in and access unlawful financial promotions. HTX has not confirmed that the steps taken will be permanent.

To protect consumers, the FCA has requested social media companies block HTX’s social media accounts to UK-based consumers. Additionally, the FCA has included a warning in its announcement that consumers dealing with HTX will not have access to the Financial Ombudsman Service, and are unlikely to get their money back if HTX were to go out of business.

FCA publishes new enforcement newsletter

On 28 January 2026, the FCA launched its new newsletter, Enforcement Watch, covering insights and themes from its enforcement work.

The first edition provides an overview of the FCA's powers to publicise an enforcement investigation in light of a recent judicial review challenge, which we covered here, and the subsequent naming of the firm in question, a claims management company (the FCA's underlying concerns related to the firm's tactics regarding potential motor finance claims).

The FCA also confirms that it has opened 23 enforcement "operations" between 3 June 2025 and 31 December 2025, which cover a wide range of suspected misconduct. Financial crime, providing false information to the FCA, poor oversight of third party providers, and conflicts of interest failings are among the mix, as well as six potential Consumer Duty breaches, particularly in relation to fair value (fair value requires firms to assess whether the price the customer pays for a product or service is reasonable compared to the overall benefits). 

The update also discusses how the FCA collaborates with international partners, which is considered key to its ability to tackle online fraud and scams, and its use of the Crime (Overseas Production Orders) Act, which enables the FCA to get court orders in the UK, which can then be served directly on providers in the US.

Cryptoasset and sanctions enforcement

On 28 January 2026, the Office of Financial Sanctions Implementation (OFSI) published a blog post on its work with other enforcement and regulatory agencies to investigate potential sanctions offences involving cryptoassets.

The blog refers to:

• the Crypto Cash Fusion Cell (CCFC), which is a pilot bringing together the National Crime Agency, the Metropolitan Police Service, HMRC, the FCA, City of London Police and OFSI, with the aim of improving how the UK enforcement and regulatory community identifies, understands and responds to criminal abuse of cryptoassets
• OFSI's July 2025 threat assessment report on sanctions compliance in the crypto sector, which we covered in our August 2025 update.

In a statement published on the same day, the FCA referred to OFSI's blog and its work with OFSI and other agencies to combat the abuse of cryptoassets and associated money laundering activities.

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Financial crime

JMLSG publishes revisions to Part I of AML and CTF guidance

On 4 February 2026, the Joint Money Laundering Steering Group (JMLSG) published final amendments to a number of paragraphs in Part I of its of its anti-money laundering (AML) and counter-terrorist financing (CTF) guidance for the financial services sector.

The changes relate to:

• monitoring effectiveness of money laundering controls
• data protection and subject access requests in cases where a suspicion report has been made.

JMLSG published a consultation on the changes in November 2025 (see our December 2025 edition).

The final revisions are available here and have been submitted to HM Treasury for ministerial approval.