SRA widens anti-money-laundering crackdown on law firms
The regulator has signalled tougher enforcement and more thematic inspections as it presses firms to close persistent gaps in client due diligence and source-of-funds checks.
The Solicitors Regulation Authority has made clear that anti-money-laundering compliance will remain at the top of its supervisory agenda, warning that too many firms are still falling short on the basics. In its recent reporting the regulator has pointed to recurring weaknesses in firm-wide risk assessments, client due diligence and the scrutiny of source of funds, areas it has flagged repeatedly in earlier reviews.
Enforcement has sharpened alongside the rhetoric. The SRA has expanded its dedicated anti-money-laundering team and increased the number of proactive inspections, and it has shown a greater willingness to impose financial penalties directly rather than referring every matter to the Solicitors Disciplinary Tribunal. Firms found with inadequate policies or missing risk assessments have faced fines and, in the more serious cases, conditions on their practising arrangements.
Compliance officers report that the pressure is being felt most acutely at smaller and mid-sized firms, where responsibility for the regime often rests with a single individual juggling other duties. Larger practices have invested heavily in specialist teams and monitoring technology, but the regulator has been careful to stress that size is no defence, and that a good policy on paper counts for little if fee-earners do not follow it in practice.
The regulator has also drawn attention to the conveyancing and private client work that sits at higher risk of exploitation, urging firms to treat unusual instructions and third-party payments with particular care. Practitioners have generally accepted the direction, while some warn that the volume of guidance now in circulation is itself becoming difficult to navigate.
For the profession the message is consistent with the wider political climate, in which the legal sector is expected to play a front-line role in the fight against economic crime. Firms that have not revisited their risk assessments recently are being urged to do so, on the assumption that the next inspection may arrive with little warning.