As regulatory scrutiny rises across the UK capital markets sector, firms must implement more robust AML screening protocols. This article explains the evolving expectations of the FCA and implications of MiCA for UK intermediaries, offering actionable insights on how iComply can help automate ongoing monitoring, meet PEP and sanctions requirements, and demonstrate audit-ready compliance.
Capital markets firms in the United Kingdom—from investment banks to securities dealers and private wealth managers—operate under one of the most stringent regulatory frameworks in the world. In 2025, this framework is expanding again, and firms face increased expectations for anti-money laundering (AML) screening, politically exposed person (PEP) monitoring, and transaction risk management.
The UK’s Financial Conduct Authority (FCA) has made it clear: compliance isn’t just about onboarding—it’s about continuous monitoring, proactive alert management, and having defensible audit trails.
At the same time, the European Markets in Crypto-Assets Regulation (MiCA), while not directly applicable in post-Brexit UK, is setting a high bar across the continent. UK regulators are watching closely and signalling similar expectations, particularly for firms interacting with cryptoassets, cross-border flows, and high-risk jurisdictions.
New AML Challenges for UK Capital Markets in 2025
1. Increased Regulatory Scrutiny The FCA’s updated financial crime guide and Dear CEO letters in 2024 emphasized that firms must:
- Demonstrate effective AML policies in practice, not just on paper
- Screen customers and counterparties against updated sanctions and PEP lists
- Have systems in place for continuous monitoring and adverse media alerts
2. Cross-Border Exposure and MiCA Influence While MiCA is EU law, its implementation is reshaping expectations globally:
- Crypto custody, exchange, and tokenization platforms must adopt bank-grade AML processes
- UK firms with EU branches or EU clients must match or exceed MiCA standards
- Regulatory equivalency will be increasingly important for cross-border capital flows
3. Data Management and Audit-ability Legacy systems often lack clear audit trails, slowing down internal reviews and exposing firms to enforcement risk.
What the FCA Expects
From 2025 onward, UK capital markets firms are expected to:
- Conduct real-time sanctions screening across all client relationships
- Implement PEP and adverse media monitoring for ongoing due diligence
- Automate AML escalation and disposition processes
- Maintain complete records of screening decisions and risk scoring logic
Firms that rely on outdated or manual processes will struggle to meet these expectations and may face increased supervisory pressure.
How iComply Helps Firms Stay Ahead
1. Real-Time Global Screening iComply integrates with leading global watchlists to screen entities and individuals for:
- Sanctions (UN, OFSI, EU, US, etc.)
- Politically Exposed Persons (PEPs)
- Adverse media and criminal proceedings
2. Risk-Based Workflow Automation Risk scoring and escalation logic can be customized per firm policy, allowing for:
- Differentiated workflows by client type or geography
- Automated alerts for matches, updates, or changes in status
3. Audit-Ready Reports and Logs All screening activity is logged with timestamps, actions taken, match details, and reviewer notes. These can be exported for internal audits, regulatory exams, or board reporting.
4. Flexible Integration and Deployment Whether firms prefer cloud, on-premise, or hybrid environments, iComply supports secure deployment with UK data residency options and edge encryption.
5. Consolidated Case Management Investigate alerts, assign actions, and document decisions in a unified AML dashboard—streamlining team workflows and reducing missed red flags.
Case Insight: Private Brokerage in London
A London-based investment firm implemented iComply’s AML screening and case management tools across its brokerage and custody divisions. Within 3 months:
- Screening false positives dropped by 38%
- Review time per flagged entity fell from 2 hours to 15 minutes
- The firm passed its next FCA review with zero material findings
What to Watch in 2025
- OFSI Sanctions List Expansions: New regimes tied to geopolitical risk will increase screening demands
- Crypto-Market Intersections: UK regulators are expected to introduce MiCA-equivalent standards for crypto exchanges and custody providers
- Supervisory Tech Expectations: The FCA is pushing for greater use of RegTech to support ongoing compliance
Take Action
Firms operating in UK capital markets can no longer rely on static screening or reactive compliance strategies. The cost of falling behind is not just reputational – it’s regulatory.
Speak with our team to learn how iComply’s AML platform can help you reduce false positives, streamline ongoing monitoring, and prepare for tomorrow’s audit – today.
