In brief. Anti money laundering (AML) checks are the controls that regulated firms must carry out on their clients and on the transactions they handle in order to prevent the proceeds of crime entering the financial system. In the United Kingdom the framework is set by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) and by the Proceeds of Crime Act 2002 (POCA 2002). ILA assists individuals and companies whose AML matter has an Italian dimension, such as documenting the Italian origin of funds or facing related proceedings in Italy.
ILA is an Italian criminal-defence firm. This guide outlines UK rules for reference; we assist English-speaking clients whose case has an Italian dimension — extradition to or from Italy, Interpol Red Notices and cross-border proceedings — alongside local counsel abroad.
In short
- AML checks in the UK are regulated by the MLR 2017 (as amended, most recently by SI 2026/621) and POCA 2002
- The core obligation is customer due diligence (CDD): identify the client, verify identity, identify the beneficial owner
- Enhanced due diligence (EDD) applies to higher-risk situations: PEPs, high-risk third countries, complex ownership structures, source of funds concerns
- Source of funds and source of wealth documentation is mandatory in property transactions and high-value cases
- Non-compliance exposes firms and individual officers to criminal liability under POCA 2002 and the MLR 2017
What are anti money laundering checks
AML checks are not a one-off formality at the start of a relationship. They are part of an ongoing monitoring duty that runs for the entire life of the business relationship and adapts to changes in risk profile.
Legal framework: UK and international references
The UK regime rests on three main sources:
- MLR 2017 (Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017): the primary regulatory instrument. Sets out the scope of regulated sector firms (banks, accountants, lawyers, estate agents, trust and company service providers, crypto-asset exchange providers), the categories of CDD and EDD, record-keeping obligations and supervisor powers
- POCA 2002 (Proceeds of Crime Act 2002): the criminal-law backbone. Defines the principal offences (sections 327, 328, 329) and the regulated sector reporting duties (sections 330-332). Section 330 imposes a duty to report suspicions to the nominated officer (MLRO) or to the National Crime Agency
- Terrorism Act 2000: anti-terrorist-financing provisions
- FATF Recommendations: the international standard the UK regime follows. After Brexit the UK no longer implements EU AML directives (it did not take part in the criminal-law Directive (EU) 2018/1673) and develops its rules autonomously
The supervisory architecture relies on multiple bodies (FCA, HMRC, professional supervisors for accountants and lawyers, SRA). Anti money laundering gives the broader picture of the regulatory framework.
Customer due diligence: levels of verification
The MLR 2017 provide for three levels of due diligence.
Simplified due diligence (SDD) applies in low-risk situations expressly identified (e.g. certain listed companies, public authorities). The firm may apply lighter verification, but the duty to monitor is not switched off.
Standard customer due diligence (CDD) is the default. It requires the firm to: (i) identify the client; (ii) verify the identity from a reliable independent source; (iii) identify the beneficial owner and take reasonable steps to verify identity; (iv) understand the purpose and nature of the business relationship. For legal entities, this entails reviewing constitutional documents and identifying ultimate beneficial owners (UBO) holding more than 25% of shares or voting rights, or otherwise exercising control.
Enhanced due diligence (EDD) applies to high-risk situations: politically exposed persons (PEPs), business relationships with persons established in high-risk jurisdictions (since the 2026 amendments, the “FATF call for action” countries), unusually complex or unusually large transactions, transactions with no apparent economic or lawful purpose. EDD requires additional source-of-funds documentation and, for PEPs and high-risk jurisdictions, senior management approval to establish or continue the relationship.
AML checks when buying a UK property
Property transactions are one of the highest-risk areas for money laundering and a fertile field for AML scrutiny. When you buy a UK property, the conveyancing solicitor and the estate agent are required to apply CDD and, in most cases, source of funds verification. They will ask for:
- Proof of identity (passport, photo ID) and proof of address (utility bill, bank statement)
- Evidence of the source of the funds used to purchase (bank statements showing the build-up of savings, sale of another property with conveyancing documents, inheritance documents, business sale agreements, dividend records)
- Source of wealth where the overall wealth picture is relevant (typically for high-value transactions)
- Information on the beneficial owner where the buyer is a corporate vehicle
Firms have a duty to refuse the transaction if they cannot satisfy themselves on the source of funds, and a duty to submit a Suspicious Activity Report (SAR) to the National Crime Agency where suspicion arises. Foreign clients purchasing UK property frequently encounter EDD because of cross-border indicators; documenting the source of funds in advance reduces friction and the risk of transaction freezes.
Sanctions for non-compliance
Failure to comply with the AML regime exposes regulated firms, their officers and their clients to a layered set of consequences:
- Criminal liability under POCA 2002 (sections 327, 328, 329): the principal money-laundering offences carry up to 14 years’ imprisonment
- Criminal liability under section 330 POCA 2002 for failure to report suspicious activity in the regulated sector (up to 5 years)
- Regulatory sanctions under the MLR 2017: significant fines, public censure, withdrawal of authorisation
- Civil consequences: account freezing orders and unexplained wealth orders under POCA 2002 (as amended by the Criminal Finances Act 2017 and ECCTA 2023); separately, financial-sanctions asset freezes under the Sanctions and Anti-Money Laundering Act 2018
- Reputational damage: SARs are confidential but enforcement actions are typically published
For UK proceedings, representation is a matter for UK-qualified lawyers; ILA assists clients on the Italian side of these matters (Italian criminal exposure, documentation of funds of Italian origin, mutual legal assistance), in coordination with local counsel. Our parallel money laundering page covers the substantive offences in depth, while money laundering meaning addresses terminology and conceptual background.
Case examples
(Illustrative examples of typical situations: they do not refer to specific proceedings or to clients of the firm.)
Case 1 — EDD on cross-border property purchase. A buyer resident in Italy acquiring a London residential property is asked by the conveyancing solicitor to document the source of funds across several jurisdictions, including evidence of business income, dividends and the sale of a property in Italy. Assembling the Italian documentation in advance (deeds, tax returns, bank records) is what typically allows CDD to be completed without delays.
Case 2 — SAR-driven account freezing order. A bank files a Suspicious Activity Report and a UK account receiving funds from Italy is made subject to an account freezing order. The proceedings before the Magistrates’ Court are handled by UK counsel; on the Italian side, the defence can work on documenting the lawful origin of the funds and on any parallel Italian investigation. Evidence of source of funds is usually the decisive issue in freezing-order proceedings.
FAQ
What are anti money laundering checks? AML checks are the controls that regulated firms (banks, lawyers, accountants, estate agents, crypto exchanges) must apply to identify clients, verify identity, identify beneficial owners and assess source of funds. The regime is set by the MLR 2017 and POCA 2002.
Who has to carry out AML checks in the UK? Firms in the regulated sector as defined by the MLR 2017: banks and financial institutions, accountants and tax advisers, lawyers (for transactional work), estate agents, trust and company service providers, high-value dealers, crypto-asset exchange and custodian wallet providers.
What documents are needed for AML checks when buying a house in the UK? Proof of identity (passport, photo ID), proof of address (utility bill or bank statement issued in the last three months), and evidence of the source of funds (bank statements showing the build-up of savings, sale documents for another property, inheritance documents, business sale agreements). For corporate buyers, additional UBO documentation is required.
Is enhanced due diligence always required for foreign clients? Not always. EDD is mandatory for PEPs, clients established in high-risk jurisdictions (FATF “call for action” countries) and unusually complex or unusually large transactions. For other foreign clients, the firm applies standard CDD with risk-based adjustments. Documenting source of funds in advance is the most efficient way to clear EDD when it applies.
What happens if a firm submits a Suspicious Activity Report on me? The firm submits a SAR to the National Crime Agency. The SAR is confidential and tipping off is a criminal offence. The NCA may grant or refuse consent to proceed with the transaction. In some cases an account freezing order may follow. Legal representation by UK-qualified counsel is essential to manage the process and to demonstrate the lawful source of the funds.
Read also: our complete guide to money laundering in Italy for the Italian civil-law perspective on money laundering, and the white-collar crime overview for the broader white-collar context.
About ILA
International Lawyers Associates is an Italian criminal-law firm with offices in Naples, Milan and Rome, directed by Avv. Alexandro Tirelli. The firm handles money-laundering defence and cross-border investigations with an Italian dimension, working alongside local counsel abroad.