AML: One third of inspected firms not compliant, SRA reveals in annual report

The number of anti-money laundering 'proactive engagements' conducted by the Solicitors Regulation Authority soared by 72% last year, the regulator's AML annual report reveals. Almost a third (32.4%) of inspected firms were not compliant, the report reveals as the SRA prepares to hand over responsibility for AML compliance to the Financial Conduct Authority. 

According to the report, 935 firms - one in six of the number regulated for AML requirements - were probed in 2024-25. This is an increase on 545 proactive engagements in the previous reporting year. Conveyancing, in particular residential conveyancing, remained the area with the greatest risk, the report states. 

Examples of non compliance included failure to carry out client due diligence or risk assessments or a failure to train staff. In the year, 270 non compliant firms were referred for investigation. The number of cases brought before the Solicitors Disciplinary Tribunal rose from four in 2023/24 to 14 in 2024/25. Of those cases, 13 resulted in a fine, with no order for the remaining one. 

Introducing the annual report, Paul Philip, chief executive, said he was proud of the SRA's work. 'This past year has been marked by significant progress in our efforts to prevent and detect money laundering, as we continue to prioritise anti-money laundering initiatives. While most firms demonstrated a strong understanding of their obligations and a clear commitment to compliance, the identification of non-compliance in nearly a third of cases highlights the continued need for sector-wide improvement and sustained regulatory attention.'

On the takeover by the FCA, Philip said he was 'disappointed we will not be able to build on that work'. He noted that the reform 'is still subject to the passage of enabling legislation, confirmation of funding arrangements, and development of a detailed transition and delivery plan'.