ICAEW’s 2024/25 anti-money laundering supervision report, confirms that compliance levels among the 1,185 firms monitored remained in-line with the previous year with 80% found to be compliant or generally compliant.

The results showed an increase in the proportion of firms which were found to be compliant up to 19.4% from 13.9% in 2023/24, but the number of non-compliant firms increased slightly to 20% from 19.3%.

Alongside key compliance figures, the report outlines that the most common issues identified during monitoring reviews. These continue to be related to customer due diligence (CDD), with ICAEW finding that:

• 12.6% of firms had ineffective risk assessment documentation;
• 11.9% of firms had ineffective client identification procedures;
• 10.2% of firms had ineffective verification procedures; and
• 11.6% of firms were not updating CDD throughout the duration of client relationships. 

Duncan Wiggetts, ICAEW Chief Officer, Professional Standards, said: “Our role as an AML supervisor is to act in the public interest to strengthen trust in ICAEW members and firms by raising standards through a programme of continuous improvement. 

“This year, our commitment to improvement regulation has been clearer than ever. With 9,500 firms under our supervision, we have continued to invest in proactive monitoring, thematic reviews, and targeted interventions.” 

Cause of compliance issues

This year, ICAEW undertook an in-depth analysis of firms found to be non-compliant to understand what lies behind the issues. 

Michelle Giddings, ICAEW’s Head of AML, explains: “The National Risk Assessment 2025 sets out that poor AML compliance exposes firms to the risk that they will be abused by criminals, potentially enabling money laundering. In this report, we’ve set out the results of our work on examining non-compliance and understanding the root causes.”

ICAEW assessed the size of firm and whether this was the first-time it had compliance issues. It found that firms with less than £300k of income were under-represented within the population of firms referred for formal and informal follow-up action, while those with an income over £2m were over-represented.

Firms that had been referred previously for follow-up actions were most likely to be in the mid-tier firms, while smaller firms were more likely to be referred for first-time issues.

The report says the findings highlight the importance of firms reflecting on findings from monitoring reviews and taking effective action to rectify the areas of non-compliance identified so that they don’t recur. 

ICAEW found that other root causes include a lack of understanding of regulations, insufficient risk assessment, and over-reliance on long-standing client relationships.

The report states: “We generally find that firms are trying their best and will believe their compliance measures are effective, but our reviews reveal gaps in their understanding of the requirements.

“Many focus too much on ID verification and neglect assessing or mitigating client risks. Additionally, firms frequently fail to update risk assessments and mitigation efforts regularly.”

The future of AML supervision

ICAEW currently supervises 9,500 firms in relation to anti-money laundering regulations, however, Treasury has announced plans for this work to be taken over by a Single Professional Services Supervisor. 

ICAEW is disappointed with the government’s decision and believes it is likely to increase the regulatory burden and costs to firms, while creating greater confusion within the regulatory framework.

Parjinder Basra, chair of the ICAEW Regulatory Board, confirmed: “We intend to continue to engage with Ministers and HM Treasury to ensure that all of the ramifications of this decision are understood, and to suggest alternative ways forward.”