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Stamp Duty Stress Over: The SRA’s AML Compliance Crackdown Awaits

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The surge in conveyancing activity due to the imminent ending of the Stamp Duty Holiday has placed significant pressure on law firms to maintain rigorous Anti-Money Laundering (AML) compliance standards. The urgency to expedite transactions may well have lead to shortcuts in due diligence processes.

Financial criminals often exploit such high-pressure periods, making it imperative for firms to adhere strictly to AML policies protocols.

The increased market activity may result in a higher incidence of incomplete transactions. For instance, in Q3 of 2024, there were approximately 84,079 abortive transactions, the highest since 2022. This trend underscores the need for law firms to manage risks meticulously and avoid overlooking potential red flags.

Firms should be acutely aware that the Solicitors Regulation Authority (SRA) is likely to ramp up auditing activity post-April 1, cynically knowing that many law firms may have turned a blind eye to client matter risk assessments in the rush to complete transactions before the stamp duty changes. This period represents a prime opportunity for the regulator to scrutinise compliance failures and impose sanctions where necessary.

When it comes to a SRA AML audit and reviews your files months down the line, they won't be interested in how “manically busy” you were. The frantic rush to complete transactions before the Stamp Duty deadline won't count as a mitigating factor. Compliance is compliance—no matter how chaotic things were at the time.

Now would be a good time to book in an independent AML audit ahead of the SRA knocking on the door.

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