AML compliance is improving, but substantial fines are still being imposed. For conveyancing firms, those findings should prompt a review of their own evidence rather than an assumption that regulatory pressure is passing.
The SRA’s Anti-Money Laundering Annual Report 2025–26, published on 22 October 2026, records financial penalties totalling approximately £2.6 million across regulatory settlements, SRA adjudications and Solicitors Disciplinary Tribunal outcomes.
The report covers 6 April 2025 to 5 April 2026. It identifies improvements in compliance while continuing to highlight weaknesses in the practical application of AML controls.
The useful question for a conveyancing practice is straightforward: can the firm demonstrate that its own controls work, including on matters completed before its latest improvements?
Improvement and enforcement can happen together
The SRA’s annual report records a reduction in the proportion assessed as non-compliant through proactive supervision, from 32.4% to 21.9%. Reports of suspected breaches also fell from 426 to 336.
Those figures are encouraging. They describe the regulator’s supervised and reported activity, rather than establishing the compliance position of every law firm.
The SRA also explains why enforcement outcomes can rise while compliance improves: investigations concluding during the reporting year may have begun in earlier periods.
For an individual firm, adopting better procedures today does not establish what happened on a file completed two years ago. Equally, an earlier weakness should not obscure properly evidenced improvements made since then.
Separate three questions about your firm
A useful management review distinguishes:
- Past compliance: what arrangements existed, and how were they applied on earlier matters?
- Current effectiveness: do the firm’s controls operate properly on live work?
- Remediation: what weaknesses have been identified, addressed and subsequently tested?
These questions require different evidence. A newly approved policy may demonstrate a change in procedure. It does not establish that earlier transactions were assessed under that procedure.
A recent training certificate records participation. Management should also consider whether the relevant learning is reflected in file handling and supervision.
What would show that your conveyancing controls have improved?
Start with an improvement the firm believes it has made and follow it through to the evidence.
For example, the practice may have introduced a requirement to reassess matters when the source or provider of funds changes. To test that improvement, review matters where the funding actually changed.
Can the reviewer identify the new information, the revised assessment, any further enquiries and the conclusion reached before the affected transaction step?
This provides more useful evidence than confirming that the new instruction appears in the AML manual.
Our guide to testing source of funds during internal AML file reviews explains how to examine the investigation and reasoning.
The findings are consistent with Lexsure’s audit experience
The SRA’s concern about the application of controls is consistent with Lexsure’s findings during the independent AML audits it has carried out over the last 12 months.
Examples identified during those audits include missing or ineffective client and matter risk assessments, unsupported risk ratings and insufficient evidence of source-of-funds scrutiny.
Those are findings from individual audits. They illustrate the importance of examining the relationship between written requirements and the evidence on actual matters.
A firm may recognise an issue but still need to establish its extent. Was it confined to one matter, linked to a particular workflow or repeated across several fee earners?
Review older weaknesses without rewriting the history
Where an internal review identifies a possible historical gap, establish what the contemporaneous records show.
Distinguish documents and decisions recorded during the transaction from information obtained afterwards. If a later review clarifies the position, record when that review took place and what evidence it considered.
Do not backdate an assessment or create a record suggesting that a later investigation informed an earlier decision.
Consider whether related live matters require attention and whether legal advice or regulatory reporting is necessary. A remediation plan does not replace any reporting obligation that has arisen.
The response should be proportionate to the finding and its potential extent. An isolated recording issue and a recurring failure to investigate funding may require different action.
Make corrective action specific enough to test
“Staff reminded about AML” provides limited evidence that the underlying weakness has been resolved.
A useful action record identifies:
- The finding and the evidence supporting it.
- The cause, so far as it can be established.
- Any other matters potentially affected.
- The person responsible for the response.
- The deadline and any immediate safeguards.
- The evidence required before the action can be closed.
For example, if staff do not understand the approval route for a higher-risk matter, the response may require clearer instructions, a workflow change and a briefing. A subsequent review should establish whether approvals are being obtained and conditions followed.
Our article on turning generic AML wording into practical conveyancing procedures explains how to make responsibilities and recording requirements clearer.
Keep policies connected to the work
A policy review should consider whether the document accurately describes the firm’s clients, services, systems and responsibilities.
Firms reviewing their documentation can browse the AML policies and procedures available from POLICYmonitor.
For continuing drafting support, Lexsure’s AML Policy Update Service provides suggested amendments for firms to assess and tailor.
Where an amendment is adopted, consider the forms, system prompts, approvals and training needed to implement it. A current document should describe a process the practice can actually operate.
Independent scrutiny should examine effectiveness
An independent AML audit can help management assess whether its controls are adequate, whether they are followed and whether previous recommendations have been implemented effectively.
Regulation 21 requires an independent audit function where appropriate to the size and nature of the business. It does not impose a universal requirement for every firm to purchase an annual external audit.
When discussing an audit, ask how the reviewer will select files, examine the reasoning behind decisions and report weaknesses. Agree how implementation of recommendations will be monitored.
Our guide to what independent AML audit file testing should reveal explains the practical scope.
Improving sector-wide results are welcome. The basis for confidence within your own practice should be evidence of effective controls, an accurate account of earlier weaknesses and a tested response to findings.
What evidence supports your firm’s AML confidence?
Lexsure’s independent AML audits examine policies, risk assessments, client files and staff understanding to identify gaps between written procedures and everyday practice.
Discuss an audit appropriate to your firm’s size, conveyancing work and risk exposure. Give management an evidenced basis for prioritising improvements.
Discuss your firm’s independent AML audit →
An audit supports oversight. It does not guarantee a regulatory outcome or remove responsibility for compliance from your firm.