Keeping pace with the Solicitors Regulation Authority’s expectations on anti-money laundering and sanctions compliance is becoming an increasingly demanding task. Over the past few months alone, the SRA has issued a series of revised guidance notes and warning notices. At the same time, the Law Society has updated a number of its own key resources.
For Compliance Officers for Legal Practice (COLPs), Compliance Officers for Finance and Administration (COFAs), MLROs and MLCOs, these developments are not optional reading. In larger firms, those with delegated compliance or risk responsibilities will also need to ensure they are familiar with the changes. The direction of travel is clear: supervision is intensifying, inspections are becoming more forensic, and documentation standards are rising.
We are currently reviewing and updating our own guidance notes and factsheets to reflect these changes. Our main AML training programmes are also being re-recorded to incorporate the latest developments.
What follows is a summary of the principal updates and why they matter in practice.
SARs Guidance: 12th December 2025:
www.sra.org.uk/news/news/sra-update-146-sars-guidance
This news item provides information on the publication of three new Suspicious Activity Reports (SARs) by the Government and as to be found on the National Crime Agency website. The document largely repeats earlier published guidance on the importance to law enforcement of information received in this way in dealing with serious crime. As before, there is pressure to make any SARs via the portal rather than by post. It also stresses that attempts to contact the NCA to ask if a SAR might be required will not be accepted.
SARs are required to be handled with confidentiality and an explanation of this and the phone number for the SAR Confidentiality Breach Line is provided – 0207 238 1860. A full listing of all of the NCA’s other guidance materials and videos also forms part of this note.
See also on this topic the SRA warning notice issued on the 24th November 2025: www.sra.org.uk/solicitors/guidance/money-laundering-terrorist-financing-suspicious-activity-reports and for good measure see also the Law Society’s guide at: www.lawsociety.org.uk/topics/anti-money-laundering/suspicious-activity-reports.
Changes to the Money Laundering Regulations 2017: 12th December 2025
The changes made by this order will be of little relevance to the great majority of firms. First, r.28 MLR 2017 now provides that the Register of Overseas Entities may not in itself be relied upon for proof of beneficial ownership. R.30A requires firms to notify Companies House of any anomalies uncovered when acting for a client in relation to who will count as being a beneficial owner, and that same duty will now extend to situations where the firm is approached to act for overseas entities.
Revised SRA Guidance on the AML Obligations on Firms that are Authorised and Regulated by them: 4th December 2025
https://www.sra.org.uk/solicitors/resources/money-laundering/guidance-support
The main point of this updated guidance note seems to be to advise that the Legal Sector Affinity Group AML Guidance Note (LSAG) was updated on the 23rd April 2025. Two of the issues that have now been made the subject of changes that do present themselves are the increased attention now given to Trust and Company Service Providers (TCSPs) and also dealing with Chinese clients and the transfers of funds. Whether these issues will apply to firms will clearly depend on the nature of their client base and range of services.
The problem here with clients from China is that there are strict exchange control restrictions there which will make many exports of funds illegal other than those that are permitted such as study. This, however, will not in itself constitute “criminal conduct” here as there are no such controls in the UK. This therefore means that funds taken illegally from China will not constitute money laundering activity here in accordance with s.340 POCA 2002. There are, however, major concerns as to the financing of illegal activities in the UK through the underground “daigou” transfers that might instead be used.
AML Questions and Answers: 28th January 2026
This is quite a wide-ranging guidance note setting out explanations and guidance on issues including tax adviser status and beneficial ownership. The more difficult issue of how far firms should investigate the status of counterparties is addressed in the CDD section, along with approval for passing on any CDD costs incurred as long as this is provided for in the firm’s Terms and Conditions. There are also sections on the increasingly tricky issue of source of funds and source of wealth checking and also sanctions controls.
Coping with the UK Sanctions Regime: 28th January 2026
www.sra.org.uk/solicitors/guidance/financial-sanctions-regime
This is an updated version of the guidance note first issued in 2022 shortly after the Russian invasion of Ukraine. Notwithstanding that this is an issue that will never affect the great majority of firms, and those in the high street in particular, the issue of sanctions controls has become an issue that will now form part of the numerous SRA monitoring inspections that are currently being conducted on AML compliance first and foremost, but also including certain other related issues such as this. An explanation of the sanctions regime is provided along with a section on “controls for all firms” which deals with the issue of counterparties given that the offence of having financial dealings with anyone who is a designated person was made a strict liability offence some time ago.
As already reported by us there is now no need to obtain a licence from OFSI in order to be permitted to act for a designated person as long as it does not serve to provide financial assistance to them. You would still, however, be unable to provide any financial benefit such as by making a payment of damages to them without first obtaining a licence.
For more on this recent development see the SRA news item “Update your Policies to Reflect New Sanctions Licence” at www.sra.org.uk/news/news/sra-update-145-sanctions-licence. This new provision has now been addressed in our revised versions of our Office Procedures Manuals for Firms and Sole Principals which will become available later this month.
A Single Sanctions Designations List: 28th January 2026
www.gov.uk/guidance/moving-to-a-single-list-for-uk-sanctions-designations-28-january-2026
To add to the issues of sanctions controls from above the SRA have also pointed out that the Government has now reduced the confusion that has been experienced in making sanctions checks by moving to a single list for all UK sanctions designations.
Thematic Review of Sources of Funds and of Wealth: 5th November 2025
www.sra.org.uk/sra/research-publications/thematic-review-source-funds-wealth-compliance
As already mentioned the SRA has started to examine issues relating to the source of the clients’ wealth to a greater degree than before when undertaking file reviews as part of their monitoring inspections. This will mean most obviously greater attention being paid to the file notes on the checks that have been made by the fee earner. The greater the amounts that are involved, and the more that they are out of the ordinary by nature, the more detailed the file notes will need to be.
The statistics that are contained in this thematic review include that 11% of the files examined “lacked source of funds checks and 18% showed inadequate scrutiny”, while in “8% of cases, the source of funds recorded in the ledger was not supported by the evidence collected.”
If you think that this might cause risk to your firm, and in your conveyancing work most obviously, please see our Source of Funds form at Document 14 in the Appendices to the Office Procedures Manual.
High Risk Countries requiring enhanced due diligence: 29th November 2025 www.lawsociety.org.uk/topics/anti-money-laundering/high-risk-third-countries-for-aml-purposes
Finally, the Law Society updated its list of high risk territories which will require a greater level of checking by way of Enhanced Due Diligence than usual under r.33 MLR 2017 following changes made by HM Treasury last Autumn. In Part 3 of our Office Procedures Manuals we recommend that recourse to this website should be made if there is any uncertainty as to whether a client might count as such.
Conclusion
The cumulative effect of these updates is not necessarily to introduce radically new obligations, but to reinforce and tighten supervisory expectations.
The SRA’s approach is increasingly forensic. Inspections are focusing not only on whether policies exist, but whether they are applied in practice and evidenced on file. Source of funds scrutiny, sanctions controls, and beneficial ownership verification are all areas where documentation and reasoning must withstand regulatory examination.
For compliance officers and firm leaders, the priority is to ensure that policies, training and file management practices reflect the current guidance landscape. The pace of change shows no sign of slowing. Proactive review is considerably less painful than reactive remediation following an inspection.
At Infolegal, we are continually reviewing and updating our own guidance notes, factsheets precedents and forms to reflect these changes. Wec are currently in the process of re-recording our AML training programmes to incorporate the latest developments and have recently undertaken a root and branch review of our Office Procedures Manual. In this way , Infolegal subscribers can be sure of keeping up to date with all of the changes that are introduced.