Prikhodko&Partners
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International corporate law
Business registration and support in Great Britain FINANCIAL MONITORING IN UK

Mykola Sirenko

Lawyer

E-mail

sirenko@prikhodko.com.ua

Phone numbers

Expert in corporate and international corporate law. Has extensive experience in supporting the acquisition of financial licenses in Ukraine, as well as business incorporation in the EU, the United Kingdom, Switzerland, the UAE, and key Asian jurisdictions.

FINANCIAL MONITORING IN UK

Financial monitoring is becoming more and more meticulous around the world, and in the UK in particular, it is not just about monitoring transactions, but also about a comprehensive system for preventing money laundering (AML), combating terrorist financing (CTF) and ensuring transparency in the business environment.

The UK is one of the most regulated jurisdictions in this area, and the regulatory model is recognized as one of the most effective in the world. However, this regulatory model leads to unexpected account closures for users if their transactions are not fully transparent or understandable.

In this article, we will examine the key elements of financial monitoring in the UK, as well as provide recommendations for companies that intend to operate in this country or interact with British partners to maximize their interests and avoid unforeseen difficulties.

Legislative framework: what acts regulate financial monitoring?

The main document regulating the fight against money laundering and terrorist financing is:

Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended in 2019 and 2022;
Proceeds of Crime Act 2002 (POCA);
Sanctions and Anti-Money Laundering Act 2018 (SAMLA).

Instructions and guidance from the Financial Conduct Authority (FCA), HM Revenue and Customs (HMRC) and the National Crime Agency (NCA) also apply.

Who is subject to financial monitoring?

In the United Kingdom, the obligation to comply with financial monitoring requirements applies to financial monitoring entities and primary financial monitoring entities, in particular:

Banks and financial institutions;
Insurance companies;
Law firms;
Accountants and tax consultants;
Real estate agencies;
Companies that engage in currency exchange or cryptocurrency activities;
Trusts, nominee and secretarial services.

What are the requirements for companies?

Know Your Customer (KYC)

The company is obliged to identify its client, including:

Full identity verification (passport, ID);
Establishing the source of funds;
Identification of the ultimate beneficiary (UBO).

Risk Assessment (Risk-Based Approach)

The company should develop an internal risk assessment policy. Customers are classified by risk: low, medium or high level.

Internal control and responsible person

A Money Laundering Reporting Officer (MLRO) must be appointed to ensure compliance with AML rules. He or she is responsible for identifying suspicious transactions and reporting them to the NCA.

FCA or HMRC registration

Companies operating in monitored areas are required to register with the relevant government agency and pay regular fees.

Submitting Suspicious Transaction Reports (SARs)

If a suspicious transaction is detected, a company must file a Suspicious Activity Report (SAR) with the NCA. Failure to do so is a criminal offence.

Cryptocurrencies and financial monitoring

Following the 2019 amendments, all cryptocurrency companies in the UK are subject to FCA regulation.

In particular, they are required to:

Obtain a business license;
Conduct KYC and risk assessment;
Have reserve funds and internal AML policies.

Many platforms and exchanges have been deregistered or have been excluded due to non-compliance.

Beneficiary Register (PSC Register)

Since 2016, the UK has had a public register of persons with significant control over a company. Such publicity is a key element of financial transparency.

Foreign companies that own British assets (e.g. real estate) are also required to disclose UBOs through the Overseas Entities Register.

Sanctions and asset freezes

It is also important to adhere to the sanctions policy:

The British government regularly updates the UK Sanctions List, which covers individuals and legal entities associated with money laundering, terrorism or aggression;
Violation of the sanctions regime entails fines or criminal liability;
Financial institutions are required to refuse service to persons included in the sanctions lists.

Liability for violations

Violation of financial monitoring rules in the UK is punished very severely:

Fines — can reach millions of pounds;
Criminal liability — up to 14 years of imprisonment;
Loss of licenses and denial of access to banking services.

How can our Law Firm “Prikhodko and Partners” help?

Our team provides full support on financial monitoring issues in the UK, including, but not limited to:

Development and implementation of AML policies and procedures;
Registration of companies with the relevant authorities;
Preparation for audits and inspections by regulators;
Legal assistance in cases of appealing bank actions or blocking accounts;
Consulting on cryptocurrency and fintech licensing.

We work with both British companies and Ukrainian clients entering international markets.

Conclusion

Financial monitoring in the UK is a complex but important part of doing business.

High standards of transparency, serious cash flow controls and strict compliance requirements build trust in the UK jurisdiction.

At the same time, failure to comply with these rules can have serious consequences for your business.

How long does company registration take?

A standard electronic application to Companies House is usually processed within 24 hours. However, preparation of the structure, identity verification, obtaining an address, tax setup and account opening require additional time.

Who needs to complete identity verification?

Directors and persons with significant control — PSCs — must complete verification. Once completed, the individual receives a Companies House personal code used to confirm the relevant corporate role. Non-residents may also complete verification, including by using a biometric passport.

Where is the best place to open an account for a UK company with a non-resident director?

Since traditional UK High-Street Banks require a physical business presence, the fastest and most efficient solution for international companies is to open accounts with electronic money institutions (EMIs). Platforms such as Wise Business, Revolut Business and Payoneer are licensed by the FCA and provide full UK and international account details for transactions.

When must a company register for VAT?

The general threshold is £90,000 of taxable turnover over the previous consecutive 12 months or expected turnover during the next 30 days. Separate rules may apply to non-resident and cross-border models, so VAT should be analysed before sales begin.

Is a company required to file reports if it has not traded?

Yes, it is mandatory. Even companies with no operating activity must annually file so-called “Dormant Accounts” with Companies House and confirm the ownership structure through a Confirmation Statement. Failure to file these documents results in substantial penalties (from £150 to £1,500) and compulsory dissolution of the company, with its assets passing to the Crown.

Successful cases on the topic: