SRA says:- One in three UK law firms is not compliant with AML regulations

An inspection of 935 firms in 2024/25 found

• One in three of them is not compliant with anti-money laundering (AML) regulations, according to the Solicitors Regulation Authority's (SRA’s) annual AML report.
• Failures included failing to carry out client due diligence or risk assessments, as well as inadequate staff training.

The finding emerged from the SRA's programme of 'proactive engagements' conducted with a sample of the 5,569 firms it supervises for AML in the legal sector.

• The sample was significantly larger than the 525 examined in 2024, and
• 833 firms in total received either an on-site SRA inspection or a desk-based review during the year.
• Only 112 firms were fully compliant,
• 451 were partially compliant, and
• The remaining 270 were not compliant.

Some 270 non-compliant firms were referred for further investigation, and 14 cases were taken to the Solicitors Disciplinary Tribunal, compared with only 4 in 2023/24.

• In 13 of these cases, the firm received a fine.
• A further 137 of these cases were dealt with internally by the SRA, either through guidance, a letter of advice or warning, rebukes, fines, or conditions placed on practising certificates or firm authorisations.
• About half of these involved a fine, averaging about GBP85,000.

Residential conveyancing:

• Was found to be the highest-risk area, because the sale and purchase of property allows large amounts of money to be moved and converted in a single transaction.
• It also involves assets that are attractive because they can produce income through rental payments or serve as residential property.

Other risk  areas

• Setting up trusts and companies can create structures that obscure the actual ownership and control of assets, said the SRA report.
• Money transfers made through client accounts enable funds to be moved, divided or redirected, often with an added appearance of legitimacy.

The report's findings highlight the continued need for sector-wide improvement and sustained regulatory attention, the SRA said

The report says that urgency is driven by a range of factors, including

• The rise in terrorist activity financed through criminal proceeds,
• The expansion of global sanctions regimes and
• An increasingly complex and volatile geopolitical landscape,

The SRA has cracked down on technical AML non-compliance in the past year, with dozens of firms receiving five-figure fines even for infringements where none of the parties suffered financial damage.

At the same time, the number of reported breaches of the AML regulations has risen sharply, from 227 in 2023/24 to 426 in 2024/25.

The most common reasons for a report are failure to have adequate firm-wide risk assessment in place or failure to identify or verify a client.

However, the role of the legal profession's AML supervisor is soon to be transferred to the Financial Conduct Authority as a single professional services supervisor for AML.

Sources

• SRA (full report, PDF) https://www.sra.org.uk/pdfcentre/?type=Id&data=1888107460 / https://www.sra.org.uk/sra/research-publications/aml-annual-report-2024-25-summary/ https://www.sra.org.uk/sra/research-publications/aml-annual-report-2024-25-summary/
• Law Society Gazette https://www.lawgazette.co.uk/news/aml-one-third-of-inspected-firms-not-compliant/5124970.article
• STEP UK News 23 October 2025: UK AML supervision to be consolidated under FCA https://www.step.org/industry-news/uk-aml-supervision-be-consolidated-under-fca