About CQS Conveyancing

SRA Update 147: Are Your Sanctions Checks Compliant After the Bank of Scotland Fine?

—

by

Simon Seaton
in

For conveyancing firm, the Bank of Scotland fine earlier this your should be a “loud” warning. In property transactions, where you are dealing with high-value assets and often complex ownership structures, a “near miss” on a name could lead to a total freeze of the transaction, or worse, a heavy fine and a report to the SRA.

Since most conveyancing firms rely on Electronic Verification (EV) providers, the burden of “fuzzy matching” often sits with the software you pay for. However, the legal liability remains with the law firm.

1. The Conveyancer’s “Stress Test” for Providers

You should not assume your EV provider’s “Sanctions Check” is foolproof. Ask your provider these four specific technical questions:

  • “Do you use the UK Sanctions List (UKSL) or the old Consolidated List?” As of early 2026, the SRA and OFSI emphasise using the UK Sanctions List managed by the FCDO. If they are still only hitting the old HM Treasury consolidated list, they may miss UK-specific designations.
  • “What is your ‘Fuzzy Matching’ threshold?” Ask if their system catches transliteration differences (e.g., Aleksandr vs. Alexander). If their matching is “exact” or “90% certain,” you are at risk.
  • “Does your system flag ‘Alias’ matches?” Many sanctioned individuals use known aliases. Your provider should be screening against the “AKA” fields in the UKSL.
  • “How do you handle ‘False Positives’?” If a provider’s tool auto-clears a name because the Date of Birth is missing, that is a red flag. You need a tool that forces a manual review if a name matches but other data is “thin.”

2. Why Property is a High-Target Zone

Conveyancers are “gatekeepers” to the UK’s most popular asset class for money laundering: real estate.

  • The “British Citizen” Trap: The Bank of Scotland case involved a British passport holder. Do not assume that because a client has a UK passport and a local address, they aren’t on a sanctions list.
  • The Counterparty Risk: You aren’t just screening your client. In light of this case, you should ensure your provider (or your manual process) screens the seller/buyer on the other side and any beneficial owners of corporate entities.

3. SRA Expectations vs. Automation

The SRA’s Update 147 (February 2026) and the Sectoral Risk Assessment (updated February 2026) specifically use the Bank of Scotland case to highlight a shifting “compliance baseline” for law firms. The SRA is now treating sanctions screening as a “business-as-usual” obligation rather than a high-risk outlier.

For a conveyancing practice, where the Strict Liability regime applies, here is the updated breakdown of expectations versus the reality of automation

Risk Factor: High-Value Assets

  • Conveyancing Reality: Real estate is the primary target for sanctioned capital. Any property transaction is high-stakes.
  • SRA-Mandated Mitigation: Go beyond the “Green Light.” You must manually verify any “low confidence” hits. The SRA warns against blindly relying on EV pass results without a human-led rationale.

Risk Factor: The “British Citizen” Trap

  • Conveyancing Reality: The Bank of Scotland case involved a UK passport holder. Stereotyping clients by nationality is a failure of logic.
  • SRA-Mandated Mitigation: Universal Screening. Your EV provider must screen every client and counterparty against the UK Sanctions List (UKSL), regardless of their ID type or “local” status.

Risk Factor: Transliteration & “Fuzzy” Logic

  • Conveyancing Reality: Names from Cyrillic, Arabic, or Han scripts often have 3+ Latin spellings.
  • SRA-Mandated Mitigation: Provider Benchmarking. Ask your provider for their “fuzzy threshold.” If it doesn’t catch variations like Dmitry vs Dmitrii, it is non-compliant under 2026 standards.

Risk Factor: PEP vs. Sanctions Gap

  • Conveyancing Reality: An individual can be a PEP without being sanctioned, but a PEP hit is a massive “Sanctions Red Flag.”
  • SRA-Mandated Mitigation: Integrated Hits. Ensure your EV tool links these databases. If a PEP alert fires, the SRA expects a secondary, manual search of the FCDO Searchable List.

Risk Factor: Firmwide Risk Assessment (FWRA)

  • Conveyancing Reality: Many firms have an AML policy but lack a specific Sanctions Risk Assessment.
  • SRA-Mandated Mitigation: Documented Logic. Your firmwide risk assessment must now explicitly state how you use automation and what “level of fuzziness” your firm deems acceptable for its client base.

4. Immediate Action Plan for Your Firm

  1. Review the Service Level Agreement (SLA): Check if your EV provider guarantees compliance with the latest OFSI/FCDO data sets.
  2. Update the MLRO’s Checklist: If an EV check returns a “potential match” that the software marks as “low confidence,” the MLRO must manually verify it. Never let the software “auto-dismiss” a partial name match.
  3. The “50% Rule”: Remember that the Bank of Scotland got a 50% discount for telling on themselves. If you find a name match after you’ve started work, stop immediately and report to OFSI. Do not try to “fix it” internally first.

Key Takeaway: If your verification provider cannot explain how their “fuzzy matching” works, or if they don’t know the difference between the Consolidated List and the UK Sanctions List, they are putting your practice at risk of a strict-liability fine.

Don’t wait for an audit to find the holes in your system. Use the UK’s official search tool to benchmark your provider’s results today.