A conveyancing firm may know which developers regularly recommend it. But could its compliance team explain the scale of those relationships, the work they generate and how the associated risks are controlled?
Transparency International UK has recommended that conveyancers report their membership of developer panels annually to their anti-money laundering supervisor.
This is a recommendation for reform, not a new annual reporting duty created by the report. It nevertheless raises a practical question for firms now: does management have a sufficiently clear picture of developer-related work to assess its AML exposure?
What has been proposed?
In Concerning Developments, Transparency International UK recommends annual reporting of developer-panel membership to AML supervisors.
It also proposes annual reporting about conveyancing undertaken for higher-risk overseas clients.
The report argues that panel relationships can create commercial pressures that are relevant to due diligence. Its recommendation is intended to give supervisors better visibility of those arrangements.
That is a policy proposal. Firms should distinguish it from their existing obligations and any information their supervisor currently requests.
A developer panel is not a mortgage lender panel
The terminology needs care.
A developer may maintain a list of firms recommended to purchasers, or operate another referral arrangement for buyers on its developments.
That is different from a mortgage lender’s conveyancing panel, which concerns a firm’s ability to act for that lender.
A firm may participate in both arrangements on the same purchase. Its responsibilities to the buyer and any lender client still need to be understood and discharged.
For buyers, being directed towards a recommended conveyancer should not obscure who the firm acts for, what the quoted service includes or how the buyer can raise concerns.
Panel membership is not evidence of wrongdoing
A firm familiar with a development may already understand the site documents, contract structure and recurring legal questions. That knowledge can assist efficient handling.
The concern is whether the commercial relationship affects the firm’s ability to investigate a particular client and transaction independently.
For example, would the firm seek further evidence if doing so threatened a reservation deadline? Would a fee earner feel supported in escalating a concern involving an important source of instructions?
Neither panel membership nor a regular referral stream establishes misconduct. The arrangement needs assessment against the actual work, risks and controls.
Our article on developer-referred new-build purchases and control of AML checks examines the file-level questions. This article focuses on what management should know about the relationships themselves.
Could your firm identify all its developer relationships?
A practical starting point is to establish what arrangements exist, including those that are not formally described as panels.
Relevant information may sit with different partners, offices, business-development staff or finance teams. An informal recommendation arrangement may generate substantial work without appearing on a central list.
Consider maintaining a proportionate internal record covering:
- The developer or introducing organisation.
- The developments and offices involved.
- The nature of the recommendation or referral arrangement.
- Who manages the relationship within the firm.
- The volume of instructions and associated income.
- Any financial arrangements, incentives or legal-fee contributions.
- The date of the latest risk review and any action required.
This is a suggested management tool, not a prescribed register introduced by the report.
Its value is in helping the firm understand its business. A list of names without an assessment of the work and relationships would provide limited assurance.
Assess commercial concentration, not just the number of panels
Membership of several panels does not necessarily create greater commercial dependence than receiving most instructions from one developer.
Look at the relationship in context. What proportion of the department’s work comes from it? How quickly has that work grown? Who has authority to challenge a proposed timetable or decline an instruction?
Consider whether the people making AML decisions are sufficiently separate from any pressure to preserve the referral relationship.
Management should also understand how exceptions are approved and recorded. A procedure that depends on informal permission from the relationship partner may warrant closer examination.
The aim is to identify pressures that could affect decisions and establish workable safeguards.
Reflect the business model in the firm-wide risk assessment
The SRA’s firm-wide risk assessment guidance requires firms to assess their actual exposure, including relevant client, geographical, service, transaction and delivery-channel risks.
A material developer-referral business should therefore be considered in the context of the firm’s overall assessment.
A generic statement that the firm undertakes residential conveyancing may leave important features unexplained. For example, management may need to assess the scale of off-plan purchases, remote instructions, company purchasers, third-party funding and relationships with introducers.
The assessment should connect identified risks with the controls used to address them.
Our guide to making the firm-wide risk assessment reflect the real practice explains that wider process.
Overseas connections require assessment, not assumptions
The report’s separate recommendation concerns higher-risk overseas clients. It should not be translated into a blanket assertion that every overseas purchaser is suspicious.
Assess the relevant geographical connections, ownership structure, funding, purpose and other circumstances. Nationality or residence alone does not provide a complete risk assessment.
Likewise, a client introduced through a familiar development should not inherit a low-risk conclusion simply because the firm has dealt with other buyers there.
Firm-level information supports oversight. The individual client and matter assessment must still address the particular instruction.
Could developer-panel firms attract closer FCA scrutiny?
The planned transfer of AML supervision to the Financial Conduct Authority gives firms another reason to understand their developer relationships.
The FCA’s published transition guidance says it does not expect to begin taking on supervision until autumn 2028, with the phased transition likely to complete around 2030. The reform depends on legislation. Firms remain accountable to their current supervisors in the meantime.
The FCA has explained that its existing AML approach directs greater supervisory attention towards businesses presenting greater risk. It has also committed to developing sector-specific expertise for the professions it will supervise.
Our assessment is that firms with substantial developer-panel work should be prepared for questions about those relationships where they contribute materially to AML risk. Relevant features could include concentrated referral income, high transaction volumes, complex funding and pressure to exchange before enquiries have been resolved.
This is a reasoned prediction, not confirmation that the FCA has announced a developer-panel inspection programme or adopted the proposed annual disclosure requirement.
The practical preparation is to establish the facts now: which relationships generate work, what risks arise, who can challenge commercial pressure and what evidence demonstrates that the controls operate.
Panel membership alone should not be treated as proof of higher risk or misconduct. The concern is the firm’s actual exposure and the effectiveness of its response.
What would independent testing examine?
An internal record of panel relationships shows what management has identified. Testing should examine whether the corresponding controls operate in practice.
A review of relevant matters could ask:
- Does the recorded source of the instruction match the actual referral route?
- Does the client and matter risk assessment address the material circumstances?
- Were funding enquiries completed and their conclusions supported?
- Did changes in the purchaser or funding prompt reassessment?
- Were unresolved concerns escalated before the decision to proceed?
- Can the firm demonstrate that commercial pressure did not replace professional judgment?
File selection should reflect the purpose of the review. Comparing different developments, referral routes and risk profiles may reveal issues that a sample drawn from one familiar site would miss.
For further practical questions, read our article on testing source of funds during AML file reviews.
Does every panel firm need an external annual AML audit?
Panel membership does not itself create a universal requirement for an annual external audit.
Regulation 21 of the Money Laundering Regulations 2017 requires an independent audit function where appropriate having regard to the size and nature of the business.
The relevant assessment should consider the firm’s circumstances. External support may be useful where an appropriately independent and competent review is needed.
Where developer-related work is material, explain that when agreeing the audit scope. A review should address the business the firm actually conducts, rather than examine policies without testing relevant files and decisions.
What should firms do now?
Start by establishing whether management can describe the firm’s developer relationships accurately.
Then review their significance within the FWRA, check the arrangements for independent escalation and test the relevant controls on files.
If a supervisor requests information, respond accurately through the applicable process. Do not treat a recommendation for future annual disclosure as a reporting regime already introduced.
The useful management question is whether the firm could explain both the work it receives and the safeguards governing its acceptance and progression.
Does your AML oversight reflect the work your firm receives?
Lexsure’s independent AML audits examine risk assessments, policies, controls, relevant client files and staff understanding.
If developer panels or referral relationships form a significant part of your practice, discuss how the audit can address that exposure and test whether the safeguards operate in practice.
Discuss an independent AML audit for your firm →
Agree the scope around your firm’s work and risks. Responsibility for AML compliance remains with the firm.
This article concerns general AML risk management for conveyancing practices in England and Wales and reflects checks made on 5 November 2026. Transparency International UK’s annual panel-disclosure recommendation is a proposal, not a reporting duty created by its report. Firms should check current legislation, supervisory requirements and applicable professional obligations. About Conveyancing and the linked audit service are Lexsure publications and services.