The Law Society of Scotland’s Suspicious Activity Reports (SARs) Thematic Review, published in partnership with the UK Financial Intelligence Unit (UKFIU), marks one of the most comprehensive examinations of how Scottish legal practices handle their anti-money laundering (AML) reporting obligations.

This is more than a technical report. It’s a practical mirror held up to the profession, showing both where firms excel and where gaps still exist in understanding one of the most critical components of AML compliance.

Why SARs matter

SARs form the bedrock of the UK’s defences against money laundering and terrorist financing. Under the Proceeds of Crime Act 2002 (POCA) and the Money Laundering Regulations 2017, anyone in the regulated sector, including solicitors, must report suspicions of criminal property or activity to the UKFIU, part of the National Crime Agency.

SARs enable law enforcement to trace illicit funds, disrupt criminal networks, and recover stolen assets. In practice, they are the vital link between the private sector’s vigilance and the state’s investigative power. But their effectiveness depends on quality, accuracy, and timeliness, which is what the Law Society’s review set out to evaluate.

The review: What it found

The 2025 thematic review assessed 50 Scottish legal practices, exploring their understanding of SARs obligations, the quality of reports submitted, and the processes behind those disclosures.

The findings are, on the whole, encouraging. Most Scottish legal professionals are submitting high-quality, well-reasoned SARs that meet the standards expected by the UKFIU. This demonstrates a strong culture of compliance within the sector and a growing sophistication in identifying and reporting suspicious activity.

However, the report also highlights several key areas for development:

• Threshold for suspicion: Some firms remain uncertain about when a suspicion is strong enough to justify a SAR, leading to either over-reporting or hesitation in borderline cases. 
• DAML confusion: A recurring issue was the mixed understanding among Money Laundering Reporting Officers (MLROs) about the difference between a standard information SAR and a Defence Against Money Laundering (DAML) SAR, the latter required when a firm seeks consent to proceed with a transaction that could otherwise constitute a money laundering offence. 
• Inconsistent governance: While larger firms tend to have established internal escalation procedures, smaller practices often rely heavily on the MLRO alone, without adequate secondary oversight or formal documentation. 

Why this report matters

For Scottish law firms, and for compliance professionals across the UK, this report is significant for three main reasons:

1. It sets a new benchmark for quality. The findings help define what “good” looks like in SAR reporting, offering examples and practical insights that firms can use to review their own procedures. 
2. It clarifies common misconceptions. The distinction between information SARs and DAMLs is often misunderstood, yet it’s crucial to avoiding both under- and over-reporting. 
3. It signals a regulatory focus. The Law Society’s partnership with the UKFIU underscores that AML reporting is no longer a box-ticking exercise. It’s a live, enforceable expectation and one that regulators will continue to scrutinise closely. 

As Gemma Turnbull, Head of Anti-Money Laundering at the Law Society of Scotland, noted:

“SARs are a cornerstone in the UK’s anti-money laundering defences, helping law enforcement trace criminal networks, recover illicit funds, and safeguard the financial system. The results of our review offer members valuable, practical insights to help elevate SAR quality and drive stronger compliance across the sector.”

Turning insight into action

The Law Society has committed to conducting further in-depth reviews at selected firms and continuing to refine its guidance and training. This includes updated resources, webinars, films, and podcasts focused on improving understanding of money laundering and terrorist financing risks.

Firms should use the thematic review as both a diagnostic and a training tool:

• Review internal reporting procedures to ensure staff understand what constitutes a “suspicion” and when to escalate it. 
• Clarify DAML decision-making, especially when client funds are already held. 
• Document the reasoning behind each SAR to demonstrate a consistent, risk-based approach. 
• Encourage open dialogue between MLROs and fee earners, reinforcing that raising a concern is part of good professional conduct. 

As the regulatory and geopolitical landscape evolves, the demand for robust, well-documented AML controls will only intensify. The SARs thematic review offers firms a roadmap for continuous improvement, not just to meet regulatory requirements, but to strengthen their role as gatekeepers of financial integrity.

For compliance teams, it’s an opportunity to benchmark current practice against sector-wide insights. For MLROs, it’s a call to deepen understanding of the SARs process and to ensure that quality, not just quantity, defines their reporting culture.

Now more than ever, training your staff in AML needs to be more than a tick-box exercise. Companies and law firms can easily fall out of compliance or get caught up in dirty money without a robust AML framework. Our suite of AML courses will help you stay protected. Try it now.