The Solicitors Regulation Authority (SRA) says the number of firms found to be non-compliant over anti-money laundering (AML) fell almost 10% this year.
The independent regulatory body for solicitors found 78% of firms were either compliant or partially compliant, with the proportion of non-compliant firms falling from 32.4% last year to 21.9% this year.
Of the 966 firms the SRA engaged with between 6 April 2025 to 5 April 2026, the majority (937) received an AML proactive inspection or a desk-based review.
The SRA said the number of firms assessed as non-compliant fell to 21.9%, indicating continued improvements in AML compliance across the profession, in itsAnti-Money Laundering Annual Report 2025-26.
The SRA said it received 26% fewer reports about potential breaches in money laundering regulations from professionals or consumers this year, at 336 for 2025/26 compared with 426 reports last year. It said this reduction was consistent with improvements identified through its proactive supervision findings.
SRA director of AML, Alexandra Jones, said: “This year’s report covers a period of substantial supervisory activity during the 2025/26 fiscal year. It shows continued improvement across the profession and growing awareness of the risks posed by money laundering, terrorist financing, sanctions evasion and other forms of economic crime.”
“We carried out our largest-ever programme of proactive AML supervision, completing 966 AML compliance assessments as part of 985 proactive AML engagements across the firms we supervise for AML purposes.”
The SRA conducted three onsite inspections, 578 desk-based reviews, 19 thematic engagements, and 26 AML audit reviews.
The SRA says its supervisory work has almost quadrupled since 2020/21 when it had 253 engagements, compared with this year’s 966. It also jumped almost 12% year-on-year from 864 in 2024/25.
Last year the SRA issued 14 fines totalling £363,726. Just three fines accounted for the majority of that sum, at £245,875 in total.
The SRA also made 145 regulatory settlement agreements totalling just over £2m.
The number of money laundering-related cases resulting in an outcome at the Solicitors Disciplinary Tribunal was down to eight this year, compared to 14 in 2024/25. Of those eight, six resulted in fines, amounting to £228,000 collectively, with one suspension and one strike off.
The SRA reports that since last year, cases relating to a failure to comply with sanctions regimes have tripled. Much of this work relates to human or administrative errors within firms, rather than deliberate misconduct, however.
During inspections and desk-based reviews, the SRA examined 6,592 files in total, up 12% from last year’s 5,873 files.
The SRA issued 24 Suspicious Activity Reports (SARs) to the National Crime Agency in 2025/26, an increase from 19 the previous year.
It also made one report to the Office of Financial Sanctions Implementation (OFSI) concerning a suspected sanctions breach. The matter involved a firm of solicitors acting for a client who is a designated person, without the required licence from OFSI.
The SRA said six firms were found not to have a firm-wide risk assessment (FWRAs) and were referred for investigation. Of the remaining 931 FWRAs it reviewed, it found 60% were compliant, compared with 47% in the previous reporting year.
The proportion of FWRAs assessed as non-compliant fell from 9% to 7% year-on-year.
“Our findings indicate that compliance levels continue to improve in several important areas. We have seen improvements in Firm Wide Risk Assessments (FWRAs), Client and Matter Risk Assessments (CMRAs), policies, controls and procedures (PCPs), sanctions controls and proliferation financing risk assessments. Most notably, the proportion of firms assessed as non-compliant through our proactive supervision programme fell during the reporting period,” Jones said.
“As in previous years, a large proportion of the issues identified through our supervisory and enforcement work relate not to the absence of controls, but to the quality and application of those controls in practice. Source of funds enquiries, risk assessment processes and ongoing monitoring continue to be areas where further improvement is required.”
The SRA reviewed the AML policies, controls and procedures (PCPs) put in place by 937 firms. It discovered three firms did not have PCPs in place when it carried out a desk-based review or an onsite inspection and they were referred for further investigation.
The report highlighted conveyancing, particularly residential, as the area of greatest risk. Over the past year, 50% of the 24 Suspicious Activity Reports (SARs) the SRA submitted were linked to residential property transactions.
It also warned that the Financial Action Task Force has identified AI-enabled fraud as an emerging threat, with deepfakes increasing the risk of identity fraud, impersonation and the circumvention of customer due diligence processes.
The watchdog also warned that, almost five years into the war in Ukraine, the array of global sanctions against Russia has led to various techniques to circumvent them.
Jones continued: “This year also saw the continuation of our sanctions supervision programme. While relatively few firms reported acting for designated persons, sanctions risks remain relevant across the wider profession.”
The government estimates more than £100bn is laundered every year through the UK or through UK corporate structures. The National Crime Agency believes approximately 4,500 organised crime groups operate in the UK.
One Response
It’s been asked before but why are Solicitors expected to do this?
The answer is because UK Finance cannot be trusted to do it.
I noted the fines imposed by FCA in 2025 was £124,221,367.45 (excluding court fines) as of 16/01/2026.
The other issue is that for most firms Sanctions and Proliferation financing are truly non existent concerns so having policies, procedures and proof of compliance is just a bureaucratic burden to make the SRA look good.