The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 have added new obligations to pooled client accounts.
As of 30 June 2026, whenever a firm opens a pooled client account, it must be able to identify the people whose money is held in the account and keep written records of every payment in and out for five years.
The regulations also oblige banks to understand the account, perform a risk assessment, and justify it to their supervisor.
It’s a new compliance burden, but it’s a burden the per-matter custody account model meets by design.
What’s changing
As of 30 June, the financial institution providing the account must:
- Understand its purpose and how the customer uses it.
- Satisfy itself that the use is consistent with what it knows of the customer.
- Assess and mitigate the money-laundering risk.
- Be able to demonstrate that the arrangement is appropriate.
The firm holding the pooled account must:
- Identify the persons on whose behalf monies are held.
- Maintain accurate written records of all monies paid in and out for five years.
- Respond to information requests from law enforcement.
Per-matter custody transaction account
If the new rules reward one thing above all, it’s knowing whose money is held where at any moment.
That’s where a per-matter custody transaction account (CTA) comes in.
With a per-matter CTA, the firm does not hold client money at all; an FCA-authorised provider does. This takes much of the risk and many of the new obligations off the firm’s plate, while allowing them to keep control over the movement of funds.
It has several key advantages over a pooled account:
- One CTA per matter means each client’s funds are ring-fenced and identifiable.
- The client verified at onboarding is linked to the matter’s account.
- Funds are held per matter against a known purpose, with no commingled pool confusing things.
- Automatic per-matter reconciliation means the matter ledger and the custody ledger are a single record.
- Fraud is isolated to a single matter, so one instance of wrongdoing won’t affect the entire pool.
- The per-matter structure is largely self-evidencing.
One thing a per-matter CTA doesn’t change is the client due diligence obligations. These stay squarely with the firm.
What it does remove is the friction created by the pooled account. Because a CTA isn’t commingled, the new pooled account identification and record keeping duties do not arise in the same way.
Why identity and money in one place matters
The new duty is essentially a KYC question: identify, on request, the persons whose money is held and their beneficial owners.
That is easy to answer when the verification that onboarded the client and the account that holds their money are the same infrastructure, and a burden when they are not.
A firm using a separate identity provider and a separate bank must reconcile two systems.
With Kord, KYC and client money run on one platform, so the identification and record-keeping duties are met by the same record that holds the money.
What this means for the sector
The 2026 changes set a new baseline for every new client account a firm opens. When that time comes, a firm has two choices:
- Build the compliance machinery a pooled account now demands.
- Hold client money per matter, where identification and records are baked into the structure of the account.
The first option means building and maintaining that machinery for every new account. The second builds the answer into the account itself, so the questions are already answered.
To find out more, get in touch with Kord today.
