Nearly one-third of solicitors’ firms in England and Wales have breached anti-money laundering (AML) rules in the past year, according to new figures from the Solicitors Regulation Authority (SRA). As reported by The Times UK, the findings come just weeks after ministers decided to strip the SRA of its responsibility for monitoring compliance and transfer that duty to the Financial Conduct Authority (FCA).
The SRA’s annual report revealed that of the 833 law firms inspected, 270 were found to be non-compliant with AML requirements, while a further 451 were only partially compliant. This means that 86% of firms inspected were failing to fully adhere to the regulations designed to prevent criminals from laundering money through legal services. Under the Money Laundering Regulations 2017, solicitors are required to conduct detailed client due diligence and implement robust internal procedures to detect and prevent illicit financial activities.
In total, fines against law firms reached £1.5 million over the 2024–25 period. According to the report, the Solicitors Disciplinary Tribunal imposed £545,650 in fines for serious breaches, while the SRA’s adjudicators levied another £292,000 for lesser infractions. An additional £660,000 in penalties was issued through settlements agreed between law firms and the regulator. The SRA noted that the most common violations involved firms failing to conduct adequate client risk assessments or to verify clients’ sources of funds—two core obligations under the regulations.
The Treasury’s recent national risk assessment, published in July, also underscored the “high-risk profile of the legal sector” in terms of exposure to money laundering and terrorist financing. That finding appears to have influenced the government’s decision to transfer oversight of AML compliance from the SRA to the FCA, a move that will fundamentally alter how law firms are supervised.
Paul Philip, the SRA’s outgoing chief executive, said the regulator had made major strides in recent years by using data-driven methods to identify risk and strengthen oversight. “By analysing trends across thousands of files and firms, we can deliver supervision that is evidence-led, helping to further protect the sector from criminal exploitation,” Philip said. However, he acknowledged disappointment at losing the SRA’s supervisory role, insisting that the organisation had been “increasing and improving” its approach.
“We have made significant progress in recent years,” Philip said in the report. “We are disappointed we will not be able to build on that work. Nonetheless, we will work closely with the Financial Conduct Authority, government, and other stakeholders to ensure a smooth transition.”
As The Times UK observed, the latest figures and regulatory reshuffle come amid growing concern that weaknesses in the legal sector could expose Britain to financial crime risks. With nearly nine in ten law firms falling short of full compliance, the FCA now faces the formidable task of restoring confidence in the integrity of the legal profession’s financial safeguards.
