The City of London’s next chapter will be written on blockchain, tokenisation and digital money. Whether the UK leads it will be decided by something far less glamorous than the technology — whether we get anti-money laundering right.
The City of London has reinvented itself many times. Coffee-house insurance, the eurodollar market, the Big Bang, the post-crisis rebuild — each reinvention rested on the same unglamorous foundation: trust. London prospered not because it was the cheapest place to do business or the most lightly governed, but because counterparties around the world believed that money moving through the Square Mile was money they could rely on. The next reinvention — programmable money, tokenised assets and regulated stablecoins — will be no different. And the load-bearing element of that trust, the part that quietly holds everything else up, is confidence that the money is clean.
That makes anti-money laundering the central question of the digital-money era, not a footnote to it. The reflex across much of the market is to treat AML as the brake on innovation — the cost centre that slows the clever engineering down. I want to argue the opposite. Get AML right, and it stops being a brake. It becomes the very thing that makes the UK the natural home for trusted digital money.
The reactive trap
For a generation, anti-money laundering has been built the wrong way round. It has been document-centric, siloed and fundamentally reactive: a reporting exercise that pushes suspicious activity reports into a system already straining to act on them, while the laundering carries on regardless.
The lesson I took from two decades in economic crime — much of it spent building national fraud reporting and intelligence capability — is that financial crime is a live activity. Harm does not pause while a case is assembled. A response organised around classifying offences and securing an after-the-fact prosecution will always lag the criminal, who is entrepreneurial, adapts continuously and diversifies faster than the investigator can map. The breakthrough, when it came, was not more reporting. It was sharing data across institutional silos, working from the entity — the person, the account, the wallet — rather than the document, and triaging by harm in something close to real time. That is the shift from reactive compliance to intelligence-led operations. It took years and, more than anything, a change of mindset. Its relevance to digital money is direct and immediate.
Why the ledger changes the equation
Here is the part the sceptics miss. The very properties that make people nervous about digital assets — a public, immutable, traceable ledger — are precisely the properties that make intelligence-led AML possible at scale for the first time.
In conventional banking, flows disappear behind correspondent relationships and batch reporting; reconstructing them is slow, partial and often retrospective. On a public blockchain, funds can be followed across wallets, and across chains, in ways that are simply not possible with cash or a conventional wire. Blockchain analytics — the discipline of turning on-chain data into intelligence — lets a compliance team see whether a wallet carries exposure to sanctioned entities, ransomware proceeds or illicit marketplaces, and monitor it as activity happens rather than at quarter-end. This is the same architecture I once had to assemble by hand: aggregate the data, work from the entity, automate the trigger point, prioritise by harm. The chain offers it by design.
One caveat matters, and it is the same one that defined my doctoral work. Analytics tell you that something is suspicious; they rarely tell you why. A signal is not a finding. The on-chain picture still has to be corroborated by investigation — understanding the modus operandi, the lifecycle of interaction between perpetrator and victim. Technology narrows the search; human judgement still closes it. The firms that internalise that distinction will run rings around those that mistake a risk score for a verdict.
Robust regulation as the competitive edge
The instinct elsewhere is to treat regulation and innovation as a trade-off, and to compete by being the most permissive jurisdiction in the room. The UK is making the opposite bet, and it is the right one.
The Financial Conduct Authority’s emerging regime — full backing in high-quality liquid assets, held on statutory trust, redeemable at par, with proper prudential capital behind the issuer — and the Bank of England’s June policy statement and draft final rules for systemic sterling stablecoins, with similar protections alongside central bank support, are not constraints on innovation. They are the conditions that let serious institutions participate at all. The Bank’s Deputy Governor framed it simply: innovation thrives on trust.
What the UK has assembled, and what no rival has, is a joined-up approach: the Treasury setting the regulatory perimeter, the FCA running a live sandbox, the Bank standing up its systemic regime, and the Law Commission’s world-leading work giving digital assets genuine legal certainty — all while the EU’s settlement around MiCA frays and the United States splits supervision across competing agencies. The AML layer runs through every part of it. The 2025 National Risk Assessment rated cryptoasset firms a high money-laundering risk for the first time, and flagged the growing convergence of laundering, kleptocracy and sanctions evasion. The FATF Travel Rule, OFSI’s expanding sanctions caseload and the modernisation of the suspicious-activity-reporting regime are the rails on which trusted digital money will actually run. Robust regulation is what converts a transparent ledger into money people trust.
The next Square Mile
The next iteration of the City will not be won by whoever moves fastest or asks the fewest questions. It will be won by the jurisdiction where digital money is both genuinely innovative and demonstrably clean — where a tokenised pound carries the same presumption of integrity as a banknote. That is an AML proposition before it is a technology one.
The UK starts from an unusual position of strength: centuries of legal certainty, regulators willing to innovate and hard-won national expertise in turning financial-crime data into intelligence. If we treat AML not as a compliance overhead but as the architecture of trust — proactive, intelligence-led and shared across the public and private sectors — then blockchain, tokenisation and digital money become the wave the City rides into its next century, rather than the risk that washes it away.