As hefty fines for non-compliance continue to mount, the UK government’s latest industrial strategy has promised “clearer and more proportionate” anti-money laundering (AML) rules tailored for legal professionals. But what changes do solicitors want to see?
Typically, any mention of regulatory reform triggers anxiety among practitioners, who often prefer stability over change. However, this week’s announcement brought an unusual glimmer of optimism, with the possibility of easing the increasingly onerous AML compliance burden faced by law firms.
For compliance officers drained by endless procedures, and firms handing over five-figure sums in penalties, reform can’t come soon enough. “AML is the biggest regulatory burden facing law firms in 2025,” said Paul Bennett, a partner at Bennett Briegal who advises legal practices on compliance. “The current regime is overly complex and highly confusing: if individual solicitors do not understand the regime despite extensive training then compliance suffers.” Details remain scarce, but the Treasury has committed to publishing revised AML regulations before the end of the year. Tucked into a broader industrial strategy released on Monday, the pledge acknowledges the legal sector’s pivotal role in the UK economy and flags concerns that the current AML framework risks undermining it.
While recognising the legal profession as a key line of defence against financial crime, ministers noted that the “major burden” now placed on solicitors could hinder the sector’s role as an economic engine. The strategy also criticises inconsistencies between professional regulators and the government’s pro-growth objectives. In response, the government aims to “explore measures to ensure occupational regulators have a clear set of streamlined duties and steers focused strongly on investment and growth, have clear processes and published timelines for growth-related decisions, and are held to account by government for their performance.”
In just the past week, three more firms, including a sole practitioner, have been fined sums ranging from £9,000 to £23,000 for AML breaches. Critics argue that the Solicitors Regulation Authority (SRA) has become overly punitive, imposing significant penalties even in cases where no actual harm occurred. Dozens of firms have now been fined a portion of their annual revenue for not carrying out risk assessments or implementing adequate policies. The SRA’s aggressive enforcement has strained its relationship with the profession and stretched its resources, forcing a £16.3 million boost to its annual budget. Earlier this year, there was evident frustration from SRA chief executive Paul Philip, who remarked that basic compliance deficiencies were still being found across firms. Even the regulator may welcome simpler, clearer rules to allow greater focus on those truly enabling money laundering.
So, what might a refreshed AML framework include?
Colette Best, director of anti-money laundering at Kingsley Napley, stresses that international standards limit how far the UK can diverge. Still, she suggests harmonising due diligence into a single standard, removing DBS checks for solicitors in managerial roles, and clearly defining “source of funds” requirements. “The vast majority of firms want to do the right thing to prevent money laundering. But the current regulations add pointless costs and delays for little benefit. Firms will want to see simple, clear regulations that actually allow a risk-based approach to thwart criminals,” she says.
Bennett concurs, noting that SRA enforcement often targets minor errors made in good faith. “Inevitably, law firms are fearful of mistakes and misunderstandings,” he adds. “A shift towards simplicity would help law firms and help the stated aim of supporting the professional and business services sector.”
The Law Society echoes the call for proportionate reform. Its president, Richard Atkinson, said: “Legal professionals are committed to fighting financial crime, but compliance measures must be proportionate, targeted and risk-based to be effective without stifling access to justice or placing undue strain and financial cost on firms and practitioners.” The legal sector now awaits the government’s detailed proposals—expected by the end of 2025. That gives compliance officers, at most, 187 more sleepless nights.
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Source: John Hyde, The Law Society Gazette
