“Inadequate” risk assessments put firms at risk of regulatory action

The Solicitors Regulation Authority’s (SRA) 2023/24 anti-money laundering (AML) report warns of the risks posed by common AML and financial sanctions issues. Find out what steps you and your firm can take to comply with your obligations.

Over the last 12 months, the SRA has doubled its engagement with firms, with 254 inspections and 258 desk-based reviews between April 2023 and April 2024.

This means the chance of being audited by the SRA is increasing.

Over three-quarters of firms (77%) were found to be fully (21.5%) or partially (55.5%) compliant with their AML and financial sanctions obligations.

But the SRA found 23% of firms to be non-compliant, with corrective or enforcement action including:

  • 44 fines levied totalling £556,832
  • two findings and warnings issues
  • one condition placed on a firm’s authorisation
  • four cases referred to the Solicitors Disciplinary Tribunal (SDT)

The SDT:

  • issued two fines totalling £511,900
  • suspended or placed controls on employment on one individual
  • dismissed or did not uphold the findings in two cases

Common compliance issues

Of the 118 firms found not be compliant, the most common breaches were failures to:

  • carry out client and/or matter risk assessments
  • have a compliant firm-wide risk assessment
  • have adequate AML policies, controls and procedures
  • carry out staff training
  • adequately identify and verify clients at the outset
  • assess and identify client or matter risks
  • carry out ongoing monitoring of transactions
  • carry out source of funds checks

The SRA published a thematic review on AML training in October 2024 emphasising the importance of not treating AML training as a tick-box exercise.

Steps your firm can take include:

  • making sure staff are well-versed in money laundering regulations and data protection
  • keeping comprehensive and detailed records of all sessions, materials and assessments for SRA inspections
  • keeping detailed and up-to-date training logs
  • adopting the ROLE framework:
    • relatable: tailor training to specific roles and risks, making it bespoke to your firm or work types
    • ongoing: don’t treat AML training as a one-time event and update staff regularly
    • leadership-driven: senior involvement and buy-in is crucial
    • engaging: use a mix of interactive methods (such as e-learning, workshops, webinars and more) to keep your team alert and informed, with real-life scenarios to keep it relevant

There is an upcoming thematic review on source of funds.

How we can help

As the professional body for solicitors, we have a range of expert resources to help you keep ahead of your regulatory obligations and minimise risk. 

Explore our anti-money laundering hub to access expert, practical and time-saving resources, including guidance on:

When it comes to due diligence, take a risk-based approach and ask yourself “does it make sense?’

The anti-money laundering guidance for the legal sector also contains expanded guidance on:

  • policies, controls and procedures
  • understanding and evidencing source of funds and source of wealth
  • governance and internal controls
I want to know more

Read the full AML report 2023/24 and AML training thematic review.

Call our free and confidential AML helpline for support on customer due diligence, risk assessments and source of funds.

Complete our bundle of online AML courses, led by a leading expert in risk management.

Join the Risk and Compliance Section to stay up to date with your regulatory obligations.

To learn more and gain practical know-how, read our Anti-money Laundering Toolkit (4th edition) and Assessing and Addressing Risk and Compliance in Your Law Firm (1st edition).