Revisions to anti-money laundering (AML) guidance submitted to HM Treasury have now been formally approved and incorporated into the latest edition of the Legal Sector Affinity Group (LSAG) Anti-Money Laundering Guidance for the Legal Sector 2025.

The LSAG, composed of the UK's AML regulators — including the Council for Licensed Conveyancers (CLC), Solicitors Regulation Authority (SRA), and the Law Society of Scotland — has released updated guidance aimed specifically at the legal profession.

According to LSAG, the guidance serves two primary purposes: first, to offer practical advice to legal practices for achieving compliance, and second, to communicate the expectations of supervisory AML bodies to those they oversee.

The newly updated guidance builds upon the proposed addendums issued in December 2023, which outlined amendments relating to turnover thresholds, the reporting of potential fraudulent activities, overseas entities, and risks within the supply chain.

Key updates in the new guidance include:

• Beneficial ownership is now defined as "More than 25%" rather than the previous "25% or more."

• Firms are now expected to gather more extensive identity information during Customer Due Diligence (CDD). LSAG states:

  "The name, date of birth and current address of a natural person should all be identified and practices may use government photo-card identification (including passports or driving licenses) to verify these details. To do this you should obtain documents that verify name, address and date of birth."

• Payment of the Economic Crime Levy (ECL) to HMRC is now required where a firm's turnover exceeds £10.2 million.

• A new definition of high-risk third countries is introduced, aligned with the Financial Action Task Force’s (FATF) updated “grey” and “black” lists.

• Firms face expanded obligations when assessing the "ownership and control structure" of legal persons, trusts, companies, foundations, or similar legal entities — an expectation that goes beyond merely identifying beneficial owners.

• A new subsection addresses the Register of Overseas Entities, covering the registration of entities intending to buy, sell, or transfer property or land in the UK.

• Firms must now conduct deeper Customer Due Diligence on third parties contributing funds to a transaction, with clarification provided on the extent of due diligence required.

• The guidance acknowledges that the risk profile of a domestic Politically Exposed Person (PEP) is lower than that of a non-domestic PEP.

The complete updated LSAG guidance, along with the "Schedule of Amendments" detailing all changes, can be found here.

This update comes shortly after the Solicitors Regulation Authority imposed substantial fines — totaling tens of thousands of pounds — on firms, particularly affecting conveyancers.

Common compliance failures highlighted include the failure to conduct client and matter risk assessments, failure to create or update Firm Wide Risk Assessments, inadequate client and source of funds assessments, and insufficient documentation of risk assessments during Customer Due Diligence.

Source: Today's Conveyancer