Money laundering remains one of the most significant threats to the legal profession and enforcement activity in this area remains high. The SRA’s Sectoral Risk Assessment acts as a roadmap for the regulator’s expectations. Published on 31 July 2025 this is essential reading for every conveyancing firm.
With the recent announcement that AML supervision will move from the SRA to the FCA, it’s important to make clear that whilst the supervisory body may change, the substance of AML expectations does not, at least for the short term. The SRA’s 2025 Sectoral Risk Assessment remains an essential benchmark for firms, providing the most up-to-date view of risks that the FCA is likely to inherit and intensify in its own oversight.
Why This Assessment Matters
In practice, when the SRA highlights specific risk areas, firms must show how they have assessed and mitigated those same risks internally. For conveyancers, that connection is especially important and property transactions remain one of the highest-risk areas for money laundering.
What’s New in 2025
This year’s assessment builds on the March 2024 version and reflects an evolving risk landscape. The key updates include:
• Emerging risks: such as capital flight from high-risk countries, client account issues, poor customer due diligence (CDD), and changing business models.
• Re-classified risks: vendor fraud, proliferation financing and supply-chain risk are now treated as established, not emerging.
• Enhanced sanctions section: with new international designations and UK penalties, underscoring that sanctions compliance applies to all firms, not just those with overseas clients.
The Assessment also introduces a new emphasis on supply-chain risk, acknowledging that law firms increasingly collaborate with third parties whose own control weaknesses may heighten the firm’s exposure.
Similarly, proliferation financing, the use of legitimate funds to support the development of weapons or sanctioned activity has entered the mainstream risk profile. For most conveyancing firms, that risk may feel remote, but the regulator’s expectation is clear, this risk must be assessed.
Where Conveyancing Firms Face the Greatest Risk
1. Property transactions and client accounts
Property work continues to attract criminal attention. Large sums, multiple parties, and complex ownership structures make conveyancing a prime target. The SRA now flags ‘client account issues’ and ‘capital flight from high-risk countries’ as areas of particular concern.
2. Business-model change
Firms operating with remote consultants or semi-independent branches face additional scrutiny. Decentralised structures can lead to inconsistent AML oversight, especially where local practices differ or controls depend on individual lawyers.
3. Sanctions compliance
Even firms that consider themselves purely domestic must take sanctions seriously. The SRA’s update highlights that sanctions breaches can arise in ordinary conveyancing matters where overseas funds or entities are involved.
4. Client due diligence and source-of-funds checks
The regulator remains concerned about weak CDD. It expects firms to demonstrate meaningful scrutiny of the source and flow of funds, especially where client accounts are used to hold deposits, bridging loans, or chain-break payments.
What Firms Should Be Doing Now
The updated Risk Assessment should serve as a trigger to review your firm’s exposure to AML risk and the adequacy of your current controls.
1. Update your firm-wide risk assessment (FWRA): Refer specifically to the July 2025 SRA document. Review how your firm addresses the areas identified which are relevant to your practice.
2. Monitor growth and structure. If your firm operates through multiple offices or consultants, make sure AML policies apply consistently and they evolve as your business changes. New work areas or client profile should trigger a review of your FWRA.
3. Train your People: Raise awareness on how existing and emerging red flags appear in everyday work and how to respond to them when identified.
The 2025 Risk Assessment makes clear that AML risk is both constant and evolving for the sector. Firms must take the same adaptive approach, regularly reviewing their own risks and mitigation strategies to stay aligned with regulatory expectations.
With the move to FCA supervision, while the pace and style of AML regulation are likely to change, the SRA’s risk assessment is not redundant but rather foundational and sets the baseline for the new regime when that eventually comes into being.