The government will bring forward a package of changes to money laundering regulations by the end of this year, it emerged this week.

The revised regulations, to be introduced by the Treasury, will be ‘clearer and more proportionate’ and will form part of plans to boost the professional services sector.

The pledge was revealed as part of the government’s newly-published industrial strategy which identifies the legal sector as one of the UK’s thriving areas of growth - albeit one that needs to modernise further.

The profession has been in the firing line of a blitz of money laundering regulations which have tightened in the last 10 years. Dozens of firms have been fined five-figure sums as the Solicitors Regulation Authority has sought to enforce these regulations, but some within the profession have said the new regime is too punitive and imposes a disproportionate burden.

The government’s strategy states that MLRs are a vital tool in safeguarding against money laundering and terrorist financing risks in the professional services sector, helping to protect the UK’s status as a global business destination.

But it adds that regulations have to be proportionate to the risks involved. The paper acknowledges that AML checks are seen as a ‘major burden’ to law firms.

There are no details about what the regulation changes will be, only that the Treasury will unveil a package of changes aimed at improved their effectiveness. This will include embracing digital technology to streamline checks and processes for firms and clients.

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The government says some regulators in professional services ‘are not consistently aligned’ with the government’s ambitions on economic growth. The strategy pledges to ‘explore measures to ensure occupational regulators have a clear set of streamlined duties and steers focussed strongly on investment and growth, have clear processes and published timelines for growth related decisions, and are held to account by government for their performance’.

The industrial strategy includes a section on the legal sector describing it as a national asset and engine of economic growth. In 2024 alone, it contributed £42.6bn to the economy and posted a trade surplus of £7.4bn.

Despite being seen as one of the most tightly regulated industries, the government identifies the legal sector as one of the fastest adopters of AI. It also praises the lawtech sector, which boasts more than 350 companies and attracted £5.5bn of investment in 2023.

But the industrial strategy says the legal sector still faces barriers to growth, with a pressing need for technology and AI upskilling across the workforce to keep pace with advancements.

It adds: ‘SMEs in particular struggle with technology adoption and capital for R&D investment. Market access abroad is challenged by business mobility restrictions and practice barriers. Investment in the physical state of courts and addressing court backlogs is important for investor confidence and business efficiency.

‘Modernising court infrastructure to include digital tools, such as AI and advanced case management systems, can enhance the operation of courts and secure the UK’s leadership in specialist areas.’