Money laundering continues to be one of the most significant threats to the legal profession, and enforcement activity in this area remains consistently high. The SRA’s Sectoral Risk Assessment, published on 31 July 2025, sets out the regulator’s expectations and is essential reading for every conveyancing practice.
With the recent announcement that AML supervision will transfer from the SRA to the Financial Conduct Authority (FCA), it is important to emphasise that the substance of AML requirements has not changed. At least for the short term, the SRA’s 2025 Sectoral Risk Assessment remains the most up-to-date benchmark for firms. It also provides a clear indication of the risks the FCA is likely to inherit and intensify when it assumes responsibility.
Why This Assessment Matters
When the SRA identifies a particular risk area, firms must be able to show how they have assessed and mitigated that same risk internally. For conveyancing firms, this relationship is especially important. Property transactions remain one of the highest-risk areas for money laundering, and regulators will expect firms to demonstrate a clear understanding of how these risks apply to their own practice.
What Is New in the 2025 Assessment
The 2025 assessment builds on the version published in March 2024 and reflects an evolving risk landscape. Key developments include:
• Emerging risks: capital flight from high-risk countries, client account vulnerabilities, weak customer due diligence, and risks created by changing business models.
• Reclassified risks: vendor fraud, proliferation financing and supply-chain risk are now treated as established risks rather than emerging concerns.
• Expanded sanctions content: new international designations and updated UK penalties, reinforcing that sanctions obligations apply to all firms.
The focus on supply-chain risk reflects that law firms increasingly collaborate with external parties, whose control weaknesses can increase a firm’s own exposure.
Proliferation financing, the use of legitimate funds to support the development of weapons or sanctioned activity, has also become part of the mainstream risk profile. While this risk may appear remote for conveyancing practices, the regulator expects firms to show how they have assessed it.
Where Law Firms Face the Highest Risk
1. Property transactions and client accounts
Property work continues to attract criminal activity. High transaction values, multiple intermediaries and complex ownership structures increase vulnerability. The SRA flags client account issues and capital flight from high-risk jurisdictions as areas of particular concern.
2. Business-model change
Firms that operate through remote consultants, freelance lawyers or semi-autonomous branches face added scrutiny. Decentralised structures can lead to inconsistent AML controls, especially where oversight relies on individuals rather than firm-wide systems.
3. Sanctions compliance
Even domestic-focused firms must take sanctions seriously. Overseas funds or entities with complex ownership chains can create sanctions exposure in routine conveyancing matters.
4. Client due diligence and source-of-funds checks
Weak CDD remains a significant regulatory concern. Firms must demonstrate meaningful scrutiny of the source and movement of funds, especially where client accounts are used for deposits, bridging arrangements or chain-break payments.
What Firms Should Do Now
1. Update the Firm-Wide Risk Assessment (FWRA): Refer directly to the July 2025 SRA document and ensure your FWRA addresses all relevant risks.
2. Monitor organisational growth and structure: Ensure AML policies apply consistently across offices and consultant networks. New work types or changing client demographics should trigger a review of the FWRA.
3. Train your people: Raise awareness of both existing and emerging red flags. Staff should understand how risks appear in daily work and how to escalate concerns.
A Continually Evolving Risk Landscape
The 2025 Risk Assessment makes clear that AML exposure in the legal sector is constant and evolving. Firms must review risks regularly and ensure mitigation measures are aligned with regulatory expectations.
With the upcoming move to FCA supervision, the pace and style of AML regulation may change. The SRA’s 2025 assessment provides the baseline from which the new supervisory regime is expected to develop, and it should remain central to firms’ compliance planning.