Proceeds of Crime (Money Laundering) (Threshold Amount) (Amendment) Order 2025

Lord Davies of Gower Excerpts

Monday 7th July 2025 Grand Committee

Having covered those key points, I confirm the Government’s commitment to tackling money laundering and note that this instrument forms part of the ongoing efforts in that important area. I commend the small changes in the order to the Committee.

[Lord Davies of Gower (Con)]

My Lords, I am sure that all parliamentarians will agree that tackling money laundering is a shared mission across both Houses to create a safer society and support our economy. I am proud that the previous Conservative Government introduced the economic crime levy, which raises some £100 million per year from the anti-money laundering sector. I am pleased that today’s proposals build on this legacy of tackling money laundering.

These proposals will raise the threshold for two exemptions that apply to principal money laundering offences under the Proceeds of Crime Act 2002 from £1,000 to £3,000. This will reduce the resourcing burden on law enforcement and enable our officers to dedicate more time to activities that yield greater asset denial and to disrupting criminal operations more effectively.

If we look at the number of defence against money laundering reports submitted to the UK Financial Intelligence Unit in 2024, we can see why there is a case for raising the threshold. In 2024, 23,000 reports were submitted relating to transactions between £1,000 and £3,000. Of these, only 182 were refused, leading to £209,565 of assets denied. This represents 0.1% of all assets denied as a result of defence against money laundering reports in 2024.

It is both necessary and appropriate that we ease the pressure on enforcement agencies at this level and allow resources to be focused where they can have the greatest impact on tackling the most serious crimes. This policy area has been under review following the threshold rise in 2023, and a targeted consultation was carried out on money laundering reports. The outcome of the consultation shows strong support for increasing the threshold to at least £3,000. Respondents cited multiple benefits, including a reduction in the reporting burden, the reallocation of resources to higher-value investigations, and improved outcomes for customers, particularly by reducing the number of legitimate account users who face access issues. Raising the threshold to £3,000 is supported by the UK Financial Intelligence Unit, which believes it will also reduce the reporting burden on business and free up its resources to focus more on high-value activity.

Although the case is clear to raise the threshold, the Government must also be aware of the potential risks of criminals splitting transactions to come under the threshold. This was raised by a respondent in the consultation. Although mechanisms are in place, this must be a consideration. I ask the Minister to confirm that crime rates under that £3,000 level will be monitored and that the threshold will be changed again if it becomes necessary.

In conclusion, I support today’s proposals, which will help to tackle money laundering. There is no place for crime groups attempting to launder their illicit funds through the UK financial system. It is right that we prioritise resourcing for the highest crimes.

[Lord Hanson of Flint (Lab)]

I am grateful to the noble Lord, Lord Davies, for having a shared approach to money laundering. He is right to point to the fact that there has been a consultation on this matter. He is also right to point out that, in essence, there is a shared understanding between all parties that the money laundering threshold needed to be reviewed. The figure of £3,000 that we have put in this order sets a balance. We will always keep it under review—there is potential for higher figures, which have been discussed as part of the consultation—but we have settled on a threshold of £3,000, which strikes the appropriate balance between reducing low-value reporting and mitigating the potential loss of asset denial outcomes.

The noble Lord is right to say that we need to ensure that we examine the risk of criminals splitting transactions into smaller amounts and seeking to avoid detection. The raising of the threshold is data led. It addresses an acute consumer duty risk and creates capacity in firms to tackle higher-value, more societally impacting economic crimes, all of which outweighs the residual risk of criminals circumventing the threshold limit as of now. The noble Lord was right to point to the very low level of transactions of interest between £1,000 and £3,000 in the previous regime, which resulted in further examination.

I am grateful to the noble Lord for his support. I can assure him that we will keep all matters under review, including the performance of this threshold, but I take and welcome his considered support. I commend the order to the Committee.