The legal sector has experienced increasing enforcement from the SRA this year. Much of the AML penalties has been on conveyancing firms, with fines ranging from a few thousand pounds to over £32,000. Collectively, penalties linked directly to conveyancing have already exceeded half a million pounds this year alone, reflecting the regulator’s determination to tackle weaknesses in one of the profession’s highest-risk practice areas.
But while the headlines focus on fines, there is also a growing compliance burden facing law firms and the challenge of balancing AML obligations with the realities of serving clients.
Conveyancing remains firmly in the regulator’s sights
Property transactions have long been recognised as an attractive route for money laundering. Large sums of money, complex ownership structures and tight transaction deadlines make conveyancing a natural focus for regulators.
The latest SRA decisions demonstrate that inspections are uncovering consistent failings across firms of all sizes. The overwhelming majority of sanctions relate to weaknesses in firms’ compliance frameworks.
The most common issue is the absence of properly completed client matter risk assessments (CMRAs). Around 80% of firms sanctioned this year either failed to complete them, completed them retrospectively, or could not demonstrate they had been undertaken at all.
Policies, controls and procedures (PCPs) were another recurring problem. Many firms relied on generic template documents that failed to reflect the specific risks posed by their own practice, while others had simply not reviewed their procedures to keep pace with regulatory change.
Firm-wide risk assessments (FWRAs), source of funds checks and customer due diligence also featured prominently in enforcement decisions. In many cases, regulators found little evidence that firms had adequately documented why they considered transactions to be low or high risk, or how they had verified clients’ funding.
Historical failures are still catching up with firms
One of the most striking aspects of the recent enforcement activity is that many penalties relate to failings stretching back over a decade.
Several firms were sanctioned for compliance weaknesses dating back to 2011, indicating that regulators are willing to revisit historical deficiencies where firms failed to establish appropriate AML controls or maintain compliant procedures over many years.
For law firms, this serves as an important reminder that weak systems left unchecked can continue to create regulatory exposure long after they were first introduced.
Compliance is becoming an operational challenge
While the SRA’s enforcement activity is understandable given the risks posed by money laundering, many conveyancers argue that the profession is reaching breaking point.
The modern homebuying process already faces criticism for delays, and AML requirements now sit at the centre of many of those frustrations. Every transaction demands increasingly detailed checks, repeated requests for documentation, source of funds verification and extensive record keeping.
The importance of preventing financial crime is clear but many practitioners believe the compliance framework has expanded far beyond its original purpose, placing enormous administrative pressure on firms that are acting honestly and responsibly.
The result is a growing sense of fatigue within the profession.
Experienced conveyancers increasingly report spending as much time managing compliance documentation as progressing transactions, while firms face the constant challenge of investing in systems, training and oversight to satisfy regulatory expectations.
For a sector already dealing with recruitment pressures and demanding workloads, the cumulative impact is significant. Some experienced practitioners are choosing to leave conveyancing altogether because the ever-expanding compliance burden has changed the nature of the job.
Documentation has become the regulator’s benchmark
Recent enforcement demonstrates that regulators are judging firms largely by what they can prove they have done.
Many firms undertake risk assessments and client due diligence but if those processes are undocumented, inconsistent or poorly evidenced, regulators are increasingly treating them as though they did not happen.
The largest fines imposed this year all shared inadequate or missing client matter risk assessments. In a number of the cases, the SRA concluded that failures demonstrated a persistent disregard for regulatory obligations, not just administrative oversights.
That distinction increases both financial penalties and reputational risk.
Reporting obligations remain equally important
Regulators also continue to remind solicitors of their legal obligation to report suspected money laundering and terrorist financing.
Recent guidance reinforces that suspicious transaction reports should be considered whenever client behaviour raises reasonable grounds for concern. Unusual instructions or unexplained reluctance to complete standard conveyancing processes may all require further scrutiny.
Failing to report suspicions where legally required carries consequences beyond regulatory sanctions. In some jurisdictions, it may constitute a criminal offence that could result in fines or even imprisonment against the solicitor involved.
What should law firms do
While conveyancing is attracting the most regulatory attention, the regulatory issues extend beyond property law.
Every firm undertaking work within the regulated sector should test the effectiveness of its own AML programme. Regulators are increasingly asking whether those policies are genuinely embedded into day-to-day practice.
Risk assessments should be tailored to the firm’s actual work rather than copied from standard templates. Policies should evolve alongside changing regulations. Source of funds enquiries should be proportionate but properly evidenced. Most importantly, firms should ensure there is clear documentation demonstrating how compliance decisions have been reached.
Technology can play an increasingly valuable role by automating routine checks, improving record keeping and reducing administrative burden. But no software can replace effective governance, well-trained staff and a culture that treats AML compliance as an integral part of client service rather than an obstacle to it.
The importance of protecting the legal sector from being exploited by crime is evident, but there is a growing recognition that compliance requirements have become increasingly complex and resource-intensive.
If policymakers want a faster, more efficient homebuying process, they will also need to consider how regulatory expectations affect the professionals responsible for delivering it.
Until then, conveyancing firms remain caught between helping clients move home quickly while satisfying ever-more detailed AML requirements.
