UK Economic Crime Group: Enforcement Update

Executive Summary

This edition of our Enforcement Newsletter highlights significant developments across the spectrum of economic crime enforcement relating to the Serious Fraud Office (SFO), the Office of Trade Sanctions Implementation (OTSI), and the Financial Conduct Authority (FCA):

• Political developments affecting the UK enforcement landscape
• The SFO’s first Unexplained Wealth Order
• The Court of Appeal’s dismissal of Anzhelika Khan’s sanctions delisting challenge
• New guidance from OTSI on trade sanctions due diligence for exporters
• Charges brought by the SFO following the collapse of Axiom Ince
• Penalties levied by the FCA against two challenger banks: Metro and Starling
• Action brought by the SFO against Güralp Systems following the company’s alleged breach of its Deferred Prosecution Agreement (DPA)
• EU anti-money laundering directive extended to crypto assets
• Social commentary on the sentencing powers for magistrates’ courts and England and Wales’ Terminally Ill Adults (End of Life) Bill

2025 began with significant political turbulence that left the UK facing mounting enforcement challenges amid dramatic shifts in U.S. foreign policy, including the suspension of Foreign Corrupt Practices Act (FCPA) enforcement and a thawing relationship with Russia that could lead to a potential weakening of economic sanctions. Domestically, funding constraints and a pro-growth agenda are reshaping regulatory priorities, leading to a more fragmented UK enforcement landscape.

The U.S.’ signaled reduced anti-bribery efforts puts increased pressure on the SFO and other UK regulatory bodies to step up. The SFO is showing the shoots of increased confidence under Nick Ephgrave, taking swift enforcement action and utilizing all available legal tools to secure positive outcomes. The agency’s charging of individuals linked to the collapsed Axiom Ince law firm underscores its increasing focus on accelerating the progress of investigations. Furthermore, the SFO’s first use of an Unexplained Wealth Order in the Schools case indicates an evolving strategic approach to asset recovery, shifting the burden of proof onto respondents to explain the origins of suspected criminal property.

While the future of U.S.-European cooperation on sanctions policy is uncertain, the UK’s autonomous sanctions regime continues to be strengthened. The Court of Appeal’s recent dismissal of Anzhelika Khan’s delisting challenge highlights the judiciary’s willingness to allow the government wide discretion in the exercise of its power to designate associates of individuals involved in supporting the Russian government in order to maximize pressure on the regime. Meanwhile, the government remains focused on preventing sanctions circumvention, as seen in newly issued OTSI due diligence guidance for exporters aimed at securing the UK’s trade environment against Russian evasion tactics.

The FCA continues its oversight of financial crime controls, demonstrated by substantial fines imposed on challenger banks Starling and Metro for risk management failures. Additionally, developments in the EU’s AML framework, particularly enhanced requirements for crypto asset service providers, signal a wider shift toward greater transparency in crypto asset transactions.

Collectively, these updates reflect a proactive enforcement landscape, with regulators adapting their tools and strategies to address emerging challenges.

Finally, as part of our social commentary, we consider the increased sentencing powers granted to magistrates’ courts to help ease the capacity crisis in UK prisons, and the latest progress with the controversial Terminally Ill Adults (End of Life) Bill, which legalizes assisted dying for terminally ill adults in the UK.

Political Developments Affecting UK Enforcement: A Volatile Landscape

The start of 2025 has ushered in a volatile political climate with significant implications for enforcement, particularly following the return of President Trump to the Oval Office. One of the most striking developments occurred on February 10, 2025, when the U.S. government issued an executive order suspending enforcement of the FCPA for 180 days. During this period, U.S. Attorney General Pam Bondi has been instructed to align FCPA enforcement with the new administration’s focus on prioritizing American interests.

Enacted in 1977, the FCPA prohibits companies operating in the U.S. from bribing foreign officials and has positioned the U.S. as a global leader in anti-corruption efforts. While the legislation has faced some criticism regarding jurisdictional overreach, it has undeniably driven global improvements in compliance and corporate governance. The temporary suspension signals a striking shift of focus away from bribery investigations, with the administration instead prioritizing probes into diversity, equity, and inclusion initiatives.

For the UK, this shift presents a considerable challenge. The SFO has historically relied on close cooperation and intelligence-sharing with U.S. authorities in bribery cases. While this cooperation has not always been smooth, there was previously no doubt about the shared U.S.-UK commitment to tackling corruption. Now, with the U.S. stepping back from FCPA enforcement, the UK must find alternative ways to compensate for the loss of U.S. intelligence, a resource that has played a critical role in major multi-jurisdictional cases, including Airbus, Glencore, and Petrofac, which have seen the SFO levy some of its largest financial penalties.

The Impact of Ukraine Peace Talks on Russian Sanctions Enforcement

Further complicating matters, recent geopolitical developments suggest that the UK and EU will soon find themselves at odds with the U.S. on Russian sanctions enforcement. The initiation of peace talks between the U.S. and Russia, with Ukraine sidelined, has raised concerns that a relaxation of U.S. sanctions on Russia may be imminent. Even before any formal changes to sanctions policy, U.S. enforcement agencies have reportedly been directed to deprioritize investigations into Russian kleptocrats and oligarchs.

For the UK’s sanctions enforcement agencies, this development poses a significant challenge. The UK has benefitted from close cooperation with the Office of Foreign Assets Control, which has historically been the toughest enforcer of sanctions internationally. If the U.S. weakens its Russian sanctions regime while the UK and EU maintain theirs, enforcement will become increasingly complex. Businesses operating in both the U.S. and Europe will face conflicting obligations, undermining the effectiveness of UK and EU measures and significantly reducing pressure on Russia.

Domestic Enforcement Challenges: Funding Constraints and a Deregulatory Agenda

At home, the UK’s enforcement landscape is being shaped by severe financial constraints and a government prioritizing economic growth over regulation. The broader strain on the criminal justice system is evident; last year, the government resorted to releasing thousands of prisoners early to alleviate overcrowding. Courts are severely underfunded, criminal cases take years to reach trial, and further budget cuts appear more likely than much-needed investment.

In response to these challenges, the government has increasingly leaned towards deregulation. On February, 18, 2025, Chancellor Rachel Reeves announced a comprehensive audit of the UK’s approximately 130 regulatory bodies to ensure that they are working to boost economic growth, and to consider whether some entities should be eliminated altogether. This follows Reeves’ comments that regulators, including the FCA, should “regulate for growth, not just for risk.” The message from the government is clear: economic growth takes priority over regulation, with inevitable consequences for enforcement propensity.

Conclusion: An Uncertain Future

These developments paint a picture of an increasingly fragmented and challenging enforcement landscape for the UK. In key areas such as bribery and sanctions enforcement, the UK faces the difficult task of stepping up its efforts without the U.S. cooperation it has traditionally relied upon. Meanwhile, in financial services regulation, the government’s push for growth is likely to lead to a weakening of enforcement.

The hope appears to be that a pro-growth strategy will eventually generate favorable economic conditions that enable further investment in the UK’s struggling criminal justice system and enforcement agencies. However, until such improvements materialize, the UK finds itself in the precarious position of trying to uphold its enforcement responsibilities while simultaneously scaling back regulatory oversight in pursuit of economic growth.

Unexplained Wealth Orders: A Turning Point or a One-Off Case?

On January 17, 2025, the SFO obtained an Unexplained Wealth Order (UWO) from the High Court in respect of UK property worth £1.5 million. The order was issued against Claire Schools, the ex-wife of convicted solicitor Timothy Schools, who was sentenced to 14 years imprisonment in 2022 for orchestrating a £100 million fraud. This marks the first time the SFO has secured a UWO since the tool was introduced in 2018. However, it remains uncertain whether this case signals a broader shift towards more frequent use of UWOs.

Background to UWOs

UWOs were introduced by the Criminal Finances Act 2017. They can be issued against politically exposed persons or individuals suspected of involvement in serious crime (whether directly or through association). Enforcement agencies can apply to the High Court for a UWO where there are reasonable grounds to suspect that an individual or company holds property worth at least £50,000 that either (1) exceeds their known lawful income or (2) was obtained through unlawful conduct. If granted, the burden of proof shifts to the respondent, who must demonstrate that their assets were acquired legitimately. Failure to do so may lead to the assets being presumed recoverable in civil asset recovery proceedings.

The Limited Use of UWOs to Date

Despite being hailed as a powerful tool to combat illicit wealth in the UK, particularly from corrupt foreign kleptocrats, UWOs have been used far less frequently than anticipated. When introduced, a Home Office impact assessment projected UWOs would be used in up to 20 cases each year.¹ Prior to the SFO’s recent action, however, only the National Crime Agency (NCA) had made use of UWOs, securing just 11 such orders across five cases. Their use by the NCA declined sharply after the 2020 Baker case,² where the agency faced significant cost exposure following the discharge of three UWOs.

Recent Reforms and Cost Protection Measures

The Economic Crime (Transparency and Enforcement) Act 2022 introduced reforms aimed at making UWOs a more attractive tool for enforcement agencies. A key change is the introduction of cost protections: courts can no longer award legal costs against a law enforcement agency in respect of an UWO application unless it has acted unreasonably, dishonestly, or improperly in the conduct of the UWO proceedings. However, this protection does not extend to civil recovery proceedings that may follow a UWO, leaving agencies exposed to potential costs at later stages. The government has indicated plans to extend cost protection to civil recovery, which could further encourage the use of UWOs by enforcement agencies as part of their asset recovery strategy.

The lingering financial risks may explain why UWOs remain underused against high-profile kleptocrats and oligarchs, who have the resources to mount costly legal challenges. Both the SFO and NCA are still feeling the effects of expensive losses in litigation against well-funded opponents. Notably, in this case, Claire Schools represented herself in the application, making it less likely that the UWO would face significant legal challenge on evidential grounds.

Why the SFO Used a UWO in This Case

Another notable feature of the Schools case is that the SFO sought the UWO after Claire Schools’ husband was convicted. Typically, post-conviction asset recovery proceeds under the confiscation regime, where the burden is on the SFO to prove that assets are criminal property. A UWO, however, shifts the evidential burden to the respondent: if Claire Schools fails to respond or cannot justify how she acquired the property legitimately, this opens the door to civil recovery proceedings, potentially simplifying the SFO’s task. Nick Ephgrave has committed the SFO to using the full range of enforcement tools available, and the use of the UWO in this case should be viewed within that context. It appears the SFO determined that a UWO was the most efficient route to asset recovery in this case, given the available legal options.

Conclusion

The case underscores that the SFO will deploy UWOs when expedient. However, whether it heralds a broader application of UWOs remains to be seen. The true test will be whether law enforcement agencies apply UWOs against high-profile targets with the resources to mount a strong defense. If future cases demonstrate that the legal and financial risks are manageable, UWOs could become a more commonly used tool in tackling illicit wealth. For now, this case marks as a cautious step forward rather than a definitive turning point.

UK Sanctions: Court of Appeal Rejects Anzhelika Khan Delisting Challenge

On January 24, 2025, the Court of Appeal upheld³ the High Court’s decision⁴ to reject a sanctions de-listing challenge brought by Anzhelika Khan, the wife of a sanctioned Russian oligarch and co-founder of Alfa Group, Russia’s largest private investment company, which has interests in the energy, banking and insurance sectors.

Ms. Khan was designated under the UK’s Russian sanctions regime in April 2022. The UK’s Russia sanctions are contained in The Russia (Sanctions) (EU Exit) Regulations 2019 (the Russia Regulations). The regulations were introduced for the explicit purpose⁵ of encouraging Russia to cease its destabilizing actions in Ukraine. The legal basis for Khan’s sanctioning⁶ was that she was “associated with” a person (her husband) who was deemed to have supported or obtained a benefit from the government of Russia.

Key Points From the Court’s Decision

Khan’s first ground of challenge concerned the High Court’s application of the key public law principle in Padfield,⁷ which states that a statutory power can only be used to further the purpose of the legislation that conferred it, not for unrelated purposes. Khan argued that the High Court had erred in concluding that the Secretary of State was not required, under Padfield, to consider whether her designation was “likely” to further the statutory goal of dissuading Russia from destabilizing Ukraine. Khan had argued that sanctioning her was unlikely to have this effect as she had no involvement in Russian politics and no influence over the Russian government.

The court rejected Khan’s argument, stating that the High Court’s judgment was based on a misunderstanding of the Padfield principle. The court clarified that it is not necessary to determine whether an exercise of power is “likely” to achieve the statutory purpose; it suffices that the power is used for that purpose and not for an extraneous goal (such as imposing sanctions in order to neutralize a political opponent). The distinction between purpose and efficacy of the power was crucial, and the court found that Khan’s argument conflated the two.

Additionally, the Court of Appeal dismissed Khan’s argument that her designation violated her human rights, particularly under Article 8 of the European Convention on Human Rights (the right to family and private life). The court held that the Russian Regulations were rational and legally sound, with a clear connection to the goal of applying pressure on the Russian government. Like the High Court, the Court of Appeal found the sanctions to be a proportionate interference with Khan’s rights and those of her children. While acknowledging the hardship imposed by sanctions, the court reaffirmed that such consequences were inherent to a sanctions regime aimed at exerting pressure on the Russian government by targeting individuals associated with it.

OTSI Issues New Due Diligence Guidance for Exporters

On January 7, 2025, the Office for Trade Sanctions Implementation published guidance for UK exporters on countering Russian sanctions evasion. Alongside the guidance, OTSI has published a template “no re-export to Russia” contract clause, intended to provide exporters with added protections in contracts with importers.

Addressing Sanctions Circumvention

OTSI’s guidance addresses growing concerns over sanctions circumvention, which has become a key enforcement priority. As highlighted in the foreword to the guidance, over £20 billion of UK trade with Russia is now subject to sanctions, reducing trade volumes to historic lows, with relatively few categories of goods remaining unsanctioned. With limited scope for additional trade controls, enforcement efforts have shifted towards enforcing existing restrictions and cracking down on Russian evasion tactics.

Guidance for Exporters

The guidance aims to help exporters and manufacturers identify and mitigate Russian sanctions circumvention through enhanced due diligence. It outlines the following key areas:

1. High-Risk Goods: These include items on the Common High Priority List (CHPL), which is maintained with allies such as the EU and U.S. The CHPL identifies 50 items that Russia is actively seeking for its war effort. OTSI also highlights specific UK goods targeted by Russia, including industrial machinery, motor vehicles and parts, computer monitors, processing units, and circuits.

2. High-Risk Countries for Re-Export to Russia: The list is based on various risk factors, including trade flow data for CHPL goods. While the UK remains supportive of trade with these countries where the end-destination is not Russia or another sanctioned jurisdiction, OTSI recommends applying enhanced due diligence when dealing with customers in these regions.

3. Sanctions Circumvention Red Flags: The guidance highlights key warning signs across three principal areas:

• Product risks: Such as where the product is a CHPL good or inconsistent with the end user’s stated business (for example, a bakery business that orders computer circuits)
• Customer risks: For example, the customer is involved in re-exporting to high-risk destinations, or has ties to sanctioned countries, entities or individuals
• Transaction risks: Including requests for unusual payment routes or methods (such as cryptocurrency) or discrepancies between customer’s place of incorporation and the order destination

4. Best Practices for Due Diligence: The guidance recommends:

• Conducting strategic risk assessments to understand exposure to circumvention risks
• Implementing enhanced due diligence measures for high-risk goods and export destinations
• Utilizing sanctions-oriented screening tools
• Conducting ongoing monitoring to detect suspicious patterns, such as an increase in exports of high-risk products to specific destinations

“No Export to Russia” Clause

Separately, OTSI has published a template “no export to Russia” clause for inclusion in contracts with buyers and importers in high-risk scenarios. This clause explicitly prohibits the importer from re-exporting goods to Russia. While implementing the clause is not mandatory under UK law, including it may strengthen an exporter’s due diligence procedures and reduce the risk of becoming involved in a sanctions breach as a result of their customer’s actions. Companies exporting CHPL goods or trading with high-risk jurisdictions should consider incorporating this clause and ensuring counterparties acknowledge it.

Serious Fraud Office Charges Axiom Ince Individuals

Overview

On December 20, 2024, the SFO charged five individuals from the collapsed law firm Axiom Ince (Axiom), including the firm’s CEO, Chief Financial Officer and Chief Technology Officer. The alleged offenses include fraud by abuse of position, conspiracy to destroy documents relevant to an investigation conducted by the Solicitor’s Regulation Authority (SRA), and conspiracy to mislead the SRA.

On February 12, 2025, all five defendants attended Southwark Crown Court to be arraigned. Axiom’s former Chief Financial Officer pleaded not guilty, with a trial set to commence on February 15, 2027. The arraignment of the remaining defendants has been postponed to April 30, 2025 to allow for the court to deal with a dismissal application that is to be made by Axiom’s former Chief Technology Officer and other requests by the defense teams for further time.

Pace of Investigation

The case is notable for the pace at which the SFO conducted its investigation and brought charges against the suspects. In a statement released by the SFO following the charging decision, it announced that the “thorough” and “targeted” investigation into Axiom took 15 months and was one of the fastest SFO investigations to have resulted in criminal charges.

The pace of the investigation contrasts markedly with statistics published in the SFO’s Annual Report and Accounts for 2023-24 which stated that it takes the SFO an average of 4.4 years from the date on which an investigation is formally opened to reach a “first outcome.”

The quick turnaround of the Axiom investigation echoes comments made by the SFO’s Interim Chief Capability Officer, Freya Grimwood, in a keynote speech at the Cambridge International Symposium on Economic Crime last September. In the speech, Grimwood provided an update on the SFO’s enforcement activities and signaled that a number of initiatives were being deployed by the agency to enhance its effectiveness and enforcement capabilities. This included the use of computer machine learning to assist with the pace at which the SFO reviews material during investigations. Grimwood revealed that an average SFO case involved five million documents, the largest being at around 48 million, with 25% of the SFO’s operational budget allocated to fund disclosure.

Wider Considerations

The Axiom investigation and recent charges bolster the SFO commitment to speeding up the time it takes to investigate and bring a prosecution. The investigation is an example of the SFO’s capability, in the right circumstances, of being able to conduct and complete investigations expeditiously. Whether the agency is able to showcase these improvements in cases of greater complexity, involving a significant amount of data or wrongdoing across multiple jurisdictions, remains to be seen.

The SFO’s progress towards greater efficiency in investigations continues to be hindered by problems with its e-discovery technology. In a statement made this month, the SFO announced that it had recently resolved a defect concerning an “encoding” issue in its current document review platform. A full review is separately being undertaken by the SFO regarding closed investigations that may have been impacted by incomplete disclosure following technical errors with an e-discovery platform previously used by the agency. This review is ongoing and no end date has yet been announced.

While the SFO will proclaim the Axiom investigation as a success, the agency will have no choice but to prioritize the remediation of any prior and/or current defects in its document review and disclosure platforms. Such rectification will be crucial before the SFO is able to develop a consistent track record of progressing investigations efficiently, especially for those particularly complex and data-heavy cases.

FCA Issues Fines Against Starling and Metro Bank

In October and November 2024, the FCA issued significant fines against two so-called “challenger” banks, Starling Bank (Starling) and Metro Bank (Metro), for alleged financial crime failings. The fines were the latest in a series of significant FCA penalties imposed for breaches of FCA Principle 3, which requires regulated firms to maintain adequate risk management systems.

Starling Bank

On October 2, 2024, the FCA announced that it had fined Starling £28,959,426 for “financial crime failings related to its financial sanctions screening,” which included repeated breaches of a requirement for Starling not to open accounts for high-risk customers.

The FCA had previously undertaken a review of Starling’s financial controls in 2021 and identified “serious concerns” with Starling’s anti-money laundering and sanctions controls. The FCA subsequently imposed a requirement on Starling not to open any new accounts for high-risk customers until its controls had improved. Despite the restriction, it later emerged that Starling had opened over 54,000 customer accounts for 49,000 high-risk customers between September 2021 and November 2023. In addition, Starling had become aware earlier in 2024 that its automated financial crime screening system had not screened against the full list of persons subject to financials sanctions. Starling undertook an internal review and subsequently reported a number of breaches of financial sanctions to authorities.

The FCA’s enforcement against Starling took 14 months from opening to outcome, significantly below its average of three to four years. The pace at which the FCA dealt with the breaches by Starling shows the FCA following through on its commitment made in February 2024 to carry out enforcement cases more quickly and transparently in the future.

Metro Bank

On November 12, 2024, the FCA fined Metro a total of £16,675,200, finding that the bank had failed to implement proper systems and controls between June 2016 and December 2020 to monitor transactions worth a total of £51 billion for money laundering risks.

In June 2016, Metro implemented a system to automatically review customer transactions for financial crime risks. However, a defect in the system meant that transactions were not being adequately monitored, and red flags were routinely missed. Despite concerns being raised by staff, Metro did not introduce adequate systems to check transactions and ensure that they were being included in the automated monitoring system until December 2020.

Commentary and 2025 Outlook

The Starling and Metro fines mark the continuation of a trend of the FCA penalizing financial institutions for lax financial crime controls on the basis of systems and controls breaches under Principle 3 of the FCA Handbook, raising significant amounts in financial penalties in the process. The Starling case also highlights the FCA’s critical role in enforcing sanctions compliance alongside other financial crime controls, especially at a time when the UK’s broader enforcement of financial sanctions breaches has been seen as underwhelming. All regulated financial institutions should be alert to the FCA’s focus on Principle 3 and ensure the implementation of robust systems and controls to mitigate and control financial crime-related risks and particularly to identify any areas within their systems that are vulnerable to abuse.

High Court Allows SFO to Proceed Against Güralp Systems for DPA Breach

On January 31, 2025, the High Court ruled on a preliminary matter in a dispute between the SFO and Güralp Systems (Güralp) regarding the DPA entered into by the parties in October 22, 2019. Güralp, a seismology instruments manufacturer, had agreed to the DPA to resolve allegations that it bribed foreign officials to use its technology.

The SFO applied to the High Court in November 2024 to have the DPA terminated on the basis that Güralp had breached its payment obligations thereunder. Güralp argued that the court lacked jurisdiction to deal with the alleged breach because the DPA had expired by the time the SFO made its application. The court’s decision related to the preliminary jurisdictional issue.

Background to the Dispute

The terms of the DPA required Güralp to disgorge its gross profit from the alleged criminal activity and make payment of £2,069,861 to the SFO. Güralp accepted that such disgorgement did not take place during the operation of the DPA. However, the DPA did not require immediate payment of the disgorgement sum, nor did it set out an agreed payment schedule. Rather, the total payment had to be made by the “fifth anniversary of the date” of the DPA, i.e., October 22, 2024.

Güralp had first notified the SFO in June 2023 that they might not be able to meet their financial obligations under the DPA, and instead proposed to repay the sum in three installments between 2027 and 2029. The SFO replied, rejecting the proposal, stating that they would only accept payment terms that would see the full amount repaid by October 2027, with interest of 8% applicable to any sum outstanding from November 2024 onwards.

Güralp did not respond to the SFO’s counter proposal until a day before the expiration of the DPA on October 21, 2024, claiming to have deleted the SFO’s email in error. The SFO replied the following day and gave Güralp written notice of their failure to comply, further to which Güralp had a period of 30 days to reply under the terms of that contract. In accordance with the notice, the SFO waited until the expiration of the 30 day period to make their application to the court.

Güralp claimed that the court did not have jurisdiction to hear the SFO’s application, arguing that the DPA had expired on October 22, 2024, and therefore no longer existed when the SFO made its application.

The Court’s Judgement and Reasoning

Ruling on January 31, 2025, Williams Daivd LJ noted the DPA in this matter was unusual for the reason that it did not expressly provide time limits for when the requirements of the DPA were to be met. However, upon a review of the terms of the DPA and their meaning, the court found that Güralp’s interpretation was “inconsistent with the purpose of the DPA,” and would render significant parts of its terms meaningless. As an example, the court pointed to paragraph 15 of the DPA, which stated that, at the discretion of the SFO, “late” payment of the disgorgement sum by up to 30 days would not constitute a breach. But would be subject to the interest at the judgment rate. However, the payment could only be considered “late” if it occurred after October 22, 2024. It necessarily followed that it was not envisaged for the DPA to terminate on October 22, 2024; otherwise such terms in the agreement would have been rendered otiose (which was not in keeping with the overall purpose of the DPA).

The DPA was therefore properly in effect when the SFO applied to court in November 2024. Following the judgment, the court can now determine the SFO’s application as to whether Güralp has breached the DPA. If the court finds that there has been a breach (which Güralp appears to accept), the SFO could either apply to continue the prosecution against the company for the original bribery offence or ask the judge to vary the terms of the DPA.

Quickfire Update: Strengthening the EU Anti-Money Laundering Directive in the Age of Crypto Assets

Directive (EU) 2015/849, commonly referred to as the Anti-Money Laundering Directive, is part of the European Union’s ongoing efforts to combat money laundering and terrorist financing. Initially introduced in June 2015, the directive aims to safeguard the financial system from misuse by criminals. It has undergone several updates, with the most recent amendment, Regulation (EU) 2023/1114, taking effect on December 30, 2024. This regulation enhances the directive’s scope, particularly in addressing the rapid growth of digital finance and the emergence of new types of crypto assets.

Regulation (EU) 2023/1114 significantly impacts anti-money laundering and counter-terrorist financing enforcement. It introduces stringent requirements for crypto asset service providers, including mandatory collection and retention of information on both the sender and beneficiary of crypto asset transfers. These requirements apply when at least one party to the transfer is based within the EU. The information to be recorded includes the party’s name and crypto asset account number, with the records to be kept for a minimum of five years.

The primary goal of this regulation is to improve the traceability of crypto assets, which is expected to act as a deterrent against their use in illicit activities, as well as provide investigative leads for law enforcement.

Social Commentary

Increase in Sentencing Powers for Magistrates’ Courts

On November 18, 2024, increased sentencing powers for magistrates’ courts in England and Wales came into effect following the entry into force of the Sentencing Act 2020 (Amendment of Schedule 21) (Amendment) Regulations 2024.

The new regulations doubled the maximum sentence that magistrates can impose from six to 12 months, allowing magistrates to try more serious crimes. Introducing the changes, Lord Chancellor Shabana Mahmood stated that the changes meant that the least serious cases heard by the Crown Court could now be heard as the most serious cases dealt with by the magistrates’ courts. It is hoped that this will reduce the backlog of cases in the Crown Court and decrease the number of prisoners on remand (i.e., those awaiting trial), thereby reducing strain on the UK prison estate and delivering faster justice for victims.

Statistics released last year revealed that the number of people held on remand waiting for trial or sentence reached 17,070 by September 2024 — representing the highest level in 50 years. At the end of September 2024, there were 73,105 open cases at the Crown Court, with such backlog leaving both defendants and victims waiting lengthy periods of time for resolution.

Critics of the new measures have pointed out that trials in the magistrates’ courts are significantly shorter than in the Crown Court, raising concerns that the new powers will result in excessive sentences being passed without due consideration of evidential matters. This could result in an increase in the number of appeals, which are heard in the Crown Court, thereby undermining the objective of alleviating its case backlog. There is also concern that the changes could increase the pressure on the prison estate, which currently holds over 86,000 prisoners, and add to problems with overcrowding.

It will take some time to assess the long-term effects of the magistrates’ expanded sentencing powers. While there is broad agreement on the need for measures to reduce Crown Court backlogs, focusing solely on increasing sentencing is likely to place further pressures on other vital public resources and fails to address issues of repeat offending and rehabilitation.

England and Wales Assisted Dying Bill

The Terminally Ill Adults (End of Life) Bill (the Bill) introduced by Labour MP, Kim Leadbeater, in October 2024, proposes to legalize assisted dying in England and Wales. If introduced into law, the Bill would allow individuals who are terminally ill the right to choose to end their life, and the UK would join a number of countries around the world that have legalized assisted dying such as Austria, Switzerland, and New Zealand.

The Bill has made progress through the House of Commons, having passed its first and second reading, and is presently at committee stage.⁸ It is hoped that the Bill will return to the House of Commons for a third reading on April 25, 2025.

If approved, the Bill would introduce into law that a terminally ill person may, on request, be provided with assistance to end their own life if they:

1. Have the capacity to make a decision to end their own life

2. Are over the age of 18 years’ old

3. Are ordinarily resident in England and Wales for at least 12 months

4. Are a registered patient with a general practitioner for at least 12 month

The right to assisted dying would only apply to persons that are deemed to be “terminally ill,” which the Bill presently defines as a person who has (1) “an inevitably progressive illness, disease or medical condition which cannot be reversed by treatment” and (2) the person’s death is expected within six months.

The present proposal has built in a number of steps that are required before an application for assisted dying can be approved. First, a series of declarations (known as the “first” and “second” declaration) must be made. The first declaration requires the submission of a signed and witnessed confirmation that the person meets the criteria for assistance to end their life. Upon a first declaration being made, a medical practitioner is expected to conduct a “first assessment.” If the first medical assessment determines that the person does meet the legislative and medical requirements, the person will be referred for a second medical assessment.

Only upon successful completion of a second medical assessment, can a person proceed to apply for judicial approval of an application; this step in the process has recently been a topic of great debate. The Bill presently requires that the High Court is to approve each request for assisted dying. Such requirement includes a safeguard that only upon the High Court’s approval of the request for assisted dying, can an applicant then go on to submit a second declaration (which would be the final declaration in the application process).

It has recently been reported, however, that the requirement for the High Court’s approval will be removed and replaced with a panel of legal and medical experts who would instead oversee and determine applications. This amendment follows the concerns expressed by Sir James Munby last year regarding the Bill’s proposal to involve the judiciary and doubts as to whether the High Court is the appropriate forum for such applications, referencing difficulties with ensuring that hearings could be held transparently and in the public domain. Moreover, Sir Munby also shared his concerns as to the adverse and practical implications that assisted dying applications could have on the High Court and that it would likely lead to a significant increase in demand for judicial sitting time.

In addition to the amendment, it is proposed that the expert panel would be selected by a new “Voluntary Assisted Dying Commission“ and be led by a current or former senior member of the judiciary. Many have already disagreed with the proposal for an expert panel, stating that it would not be robust or an adequate replacement for a High Court judge; others have supported the amendment and argued that a panel would allow for a multi-disciplinary approach to be taken when considering applications.

The Bill will no doubt be subject to intense debate and scrutiny over the forthcoming weeks, especially in light of the proposed amendment regarding the involvement of the High Court, with many members of parliament remaining uncertain as to how they intend to vote for the Bill at a third reading. What is clear, however, at a minimum, is the need for any future assisted dying legislation to include robust protections that will ensure (1) comprehensive monitoring and oversight of all applications; (2) protections for vulnerable persons applying under the legislation; and (3) adequate measures to mitigate against risks of any such legislation being exploited.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.