I beg to move,
That the Committee has considered the draft Proceeds of Crime (Money Laundering) (Threshold Amount) (Amendment) Order 2025.
It is a pleasure to serve under your chairship, Mr Twigg. With your indulgence, before I address the draft order I want to take the opportunity briefly to congratulate the Treasurer of His Majesty’s Household, my right hon. Friend the Member for Alyn and Deeside, on being awarded a knighthood in the recent birthday honours list. It is hugely well deserved recognition of a quarter of a century of service, and I am sure that the whole Committee will join me in congratulating him. [Hon. Members: “Hear, hear.”]
Driving down money laundering is critical to the Government’s key missions to deliver safer streets and economic growth, and I am determined that the Government will do all they can to bring justice to those seeking to wash their illicit funds through the UK. Close working with the private sector is integral to delivering on that objective. As our first line of defence, the private sector plays a fundamental role both in preventing the UK financial system from being exploited for criminal gain and in detecting suspicious activity where it has occurred.
I am proud that the UK was one of the first countries to establish a financial crime public-private partnership and has set the international standard in this area. Part of a successful public-private partnership is honestly reviewing what has worked in tackling money laundering and what needs to change for us to be more effective. With that objective in mind, and as part of “Economic Crime Plan 2”, the Government, law enforcement and the private sector have worked together to consider how public-private resource can be better directed to maximise our collective impact against the threat.
The draft order is one of the first outputs of that work. It raises the existing financial threshold for two exemptions that apply to principal money laundering offences under the Proceeds of Crime Act 2002 from £1,000 to £3,000. The uplift in the threshold will enable law enforcement resource to be focused on higher priority reports that provide greater opportunities for asset denial and disruption of criminal activity. It will also free up businesses’ resource to be redirected towards high-value activity that may have a greater impact on the threat. The measure is further expected to reduce the impact on banking customers by reducing instances of legitimate customers being unable to access their accounts, in particular where no further action is taken.
The first exemption applies to acts in operation of an account, such as paying expenses, by deposit-taking bodies, which are essentially banks and building societies, and electronic money and payment institutions. The second exemption applies in the instance of a business in the anti-money laundering regulated sector ending a relationship with a customer and paying away any money or property to the customer. This means that for transactions below the threshold, businesses in the anti-money laundering regulatory sector do not need to submit defence against money laundering suspicious activity reports, known as DAML SARs.
A DAML SAR is submitted to the National Crime Agency by a person proposing to deal with suspected criminal property, which may make them liable for one of the principal money laundering offences under the Proceeds of Crime Act. By submitting a DAML, a person can avoid committing one of the principal money laundering offences by obtaining consent, or deemed consent, for the act they propose to carry out—for example, a customer’s transaction to pay their mortgage. The DAML provides information to the UK Financial Intelligence Unit housed in the National Crime Agency and prevents the business from carrying out the activity referenced in the request until the UKFIU gives a consent decision or seven working days pass, after which the business can assume that it has consent.
In 2023, the threshold was raised to £1,000 due to the rising volume of DAMLs and the regulatory burdens on businesses to submit a DAML SAR, as well as burdens on law enforcement to review and the delay to customers, who must often wait seven days for their transaction to be processed. While the £1,000 threshold has likely contributed to a reduction in DAMLs, evidence shows that the UKFIU continues to receive a large number of low-value DAMLs, only a small proportion of which lead to asset denial opportunities.
Between January and December 2024, approximately 23,000 DAMLs relating to transactions between £1,000 and £3,000 were submitted. Of those, only 182 were refused, equating to 0.1% of all assets denied because of DAMLs in that year. To prevent the loss of information, businesses must still submit an information-only suspicious activity report to the UKFIU where they suspect any and all involvement in money laundering. That duty will not be affected by the draft order.
Having, I hope, covered the key points, I commend the draft order to the Committee.