The Solicitors Regulation Authority (SRA) has refreshed a number of its anti-money laundering (AML) and sanctions guidance documents, including guidance on:
- the financial sanctions regime;
- firm-wide risk assessments;
- money laundering and terrorist financing; and
- client and matter risk assessments.
Whilst the updates do not introduce significant new regulatory requirements, they reinforce an important message: firms should ensure that every element of their AML and sanctions framework operates as part of a joined-up compliance system rather than as a series of individual documents or processes.
A Connected Compliance Framework
One of the clearest themes emerging from the refreshed guidance is the relationship between the various components of a firm's AML framework.
The SRA's guidance links together:
- firm-wide risk assessments (FWRAs);
- policies, controls and procedures;
- client and matter risk assessments;
- customer due diligence (CDD);
- enhanced due diligence (EDD);
- ongoing monitoring;
- politically exposed persons (PEPs); and
- financial sanctions compliance.
For law firms, this serves as a useful reminder that each of these elements should support and inform the others.
For example, the risks identified within a firm's FWRA should directly influence the client and matter risk assessments completed by fee earners, determine when enhanced due diligence is required, and shape the firm's approach to ongoing monitoring and sanctions screening.
Is Your AML Framework Still Fit for Purpose?
Many firms have developed comprehensive AML documentation over recent years. However, regulatory expectations continue to evolve, and guidance updates provide an opportunity to consider whether existing processes remain aligned.
Questions worth asking include:
- Does our firm-wide risk assessment accurately reflect the services we provide today?
- Are our client and matter risk assessments consistent with the risks identified in our FWRA?
- Do our policies and procedures accurately describe how work is undertaken in practice?
- Are sanctions considerations built into our onboarding and ongoing monitoring processes?
- Have staff received training that reflects the firm's actual risk profile?
These are precisely the types of issues that are likely to be explored during an SRA inspection or file review.
Sanctions Remain a Key Regulatory Focus
The refreshed guidance also highlights the continued importance of financial sanctions compliance.
Even firms that do not routinely undertake international or high-value transactional work should consider whether their sanctions procedures remain proportionate to the risks they face. Effective sanctions compliance is no longer viewed as a standalone obligation but as an integral part of a firm's wider AML framework.
This includes ensuring that firms have appropriate processes for identifying sanctions risks, responding to potential matches, escalating concerns where necessary, and maintaining appropriate records.
A Good Time for an Independent Review
Guidance updates provide an ideal opportunity to step back and review whether your compliance framework works in practice, not simply whether the required documents exist.
An effective AML framework should demonstrate a clear link between your firm's risk assessment, its policies and procedures, the decisions made by fee earners on individual files, and the firm's ongoing monitoring arrangements.
At Complex Risk, we work with law firms to carry out independent AML and sanctions reviews, assessing not only whether firms meet their regulatory obligations, but whether their compliance systems are practical, proportionate and capable of standing up to regulatory scrutiny.
Whether you are preparing for an SRA inspection or simply looking to strengthen your firm's compliance arrangements, our experienced consultants can help ensure your AML and sanctions framework remains robust, effective and aligned with current regulatory expectations.
Read the latest updates here: SRA | All topics | Solicitors Regulation Authority
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