The UK government has announced it will introduce a set of revised money laundering regulations by the end of the year, aimed specifically at professional services, including law firms. The updated rules, set to be introduced by the HM Treasury, will be “clearer and more proportionate”, forming part of a broader initiative to strengthen the professional services sector.
 

This commitment is outlined in the government’s newly released industrial strategy, which identifies the legal sector as a high-growth area of the UK economy that nonetheless requires further modernisation. Over the past decade, law firms have faced increasingly stringent anti-money laundering (AML) regulations. The Solicitors Regulation Authority has issued multiple five-figure fines as it enforces these rules. However, voices within the profession have argued that the current framework is overly punitive and imposes an excessive burden.

The strategy notes that AML regulations are essential in protecting against money laundering and terrorist financing risks, helping to maintain the UK’s position as a global business hub. However, it also concedes that “AML checks are seen as a major burden” by many law firms, especially smaller practices. While specific details of the upcoming regulatory changes have not yet been disclosed, the Treasury aims to improve effectiveness through digitisation, streamlining AML checks and related processes for both firms and clients. The government also expressed concern that certain professional service regulators are “not consistently aligned” with national economic growth goals. To address this, the strategy promises to “explore measures to ensure occupational regulators have a clear set of streamlined duties and steers focussed 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.” 

The legal sector is described in the strategy as both a “national asset” and a powerful “engine of economic growth”. In 2024, the sector contributed £42.6 billion to the UK economy and generated a £7.4 billion trade surplus. Despite being heavily regulated, the legal sector is noted for its rapid adoption of AI technologies. The growing lawtech sector, now comprising over 350 companies, attracted £5.5 billion in investment in 2023.

However, the strategy acknowledges ongoing challenges. Upskilling in technology and AI remains critical, especially for SMEs, which often struggle with tech adoption and securing R&D funding. Market access abroad is also hindered by mobility and regulatory barriers. Investment in court infrastructure is another priority. The government highlights that “modernising court infrastructure to include digital tools, such as AI and advanced case management systems, can enhance the operation of courts and secure the UK’s leadership in specialist areas.”

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Source: John Hyde, The Law Society Gazette