Why the new SRA Review Matters, and Why You Should Care

The SRA’s November 2025 publication of its Thematic review of source of funds and wealth compliance lands at a pivotal moment for the profession. It isn’t just another regulatory exercise. With the UK’s anti-money-laundering framework (under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 — MLR 2017) now more than seven years in force, the SRA is signalling that compliance is far from optional: it’s fundamental, and enforcement will follow where obligations are ignored or only half-met.

Given solicitors and law firms are often in the position of handling large amounts of money (often in a single transaction) and can make transactions appear “legitimate,” criminals view firms as ideal vehicles for laundering funds. The Review is thus a timely reminder of why robust compliance, starting with source of funds/wealth checks is not just regulatory box-ticking, but a key line of defence.

What the Review Found: The Good, the Bad, and the Ugly

Some encouraging commitment, but not always follow-through

There was generally good awareness of the need for source-of-funds and source-of-wealth checks. Many firms told the SRA they routinely carry out such checks as part of customer-due diligence.
A minority of firms are adopting a robust approach: doing wealth-checks as a matter of course, irrespective of perceived risk, which the SRA viewed positively.

Where things are going wrong

Based on nearly 6,000 files reviewed in 2024–25, the SRA found (among other issues):

On 11% of files, there was no source of funds check at all.
On 18% of files, there was inadequate scrutiny, meaning documents had been collected, but not meaningfully assessed.
On 8% of files, the source of funds recorded in the ledger did not match the evidence on file. In other words: funds arrived, but there was a disconnect between what the paperwork said (or was meant to say) and what actually happened.

Importantly, in many cases firms collected documents (bank statements, etc.), but then did not assess or document the checks properly, often reducing the exercise to little more than a “tick-box” exercise. Other recurring problems included poor record-keeping (missing audit trails, unclear rationales for decisions), delayed checks (sometimes right at the time funds landed), or no follow-up when funds came from unexpected sources.

Notably, matters flagged as “high-risk”, like property conveyancing, remain a real concern. Despite conveyancing being singled out in the SRA’s own sector-wide risk assessment as particularly vulnerable to money laundering, the Review found multiple examples of conveyancing transactions with either no source-of-funds check, or checks that were superficial or incomplete.

Why This Isn’t Just a Paper-Chase

Liability & sanctions: The Review includes real-world case studies where firms faced enforcement action, including before the Solicitors Disciplinary Tribunal (SDT), for failing to carry out adequate checks. In one case, funds from abroad (via China) were receipted, bank statements obtained, but not properly scrutinised to satisfy the firm of the legitimacy of the source.

Reputational risk: Being involved (even unknowingly) in facilitating laundering through a conveyancing or other transaction can seriously damage a firm’s reputation.

Regulatory expectations are rising: With the SRA flagging persistent non-compliance and signalling “regulatory action” where gaps remain, there’s every reason to expect more inspections, more scrutiny, and potentially more firm-level consequences for inadequate AML processes.

What the SRA Expects

The Review doesn’t just identify problems. It also sets out clear expectations, and offers practical guidance. Here are some of the things the SRA encourages firms to do (and good practices that stood out):

Risk-based approach, but properly documented: Firms’ source-of-funds / wealth checks should reflect the risk profile of the client and matter. In higher-risk matters (especially conveyancing), enhanced customer-due diligence must be applied, in line with MLR 2017’s Regulation 33.
Do the checks early: start probing the origin of funds at as early a stage as possible (not waiting until funds land).
Scrutinise and document the checks: it’s not enough to collect documents; fee-earners must actually review them, assess whether they’re consistent with the sources claimed, record their rationale, and explain any decision to proceed (or not).
Record changes and monitor ongoing transactions: if funding sources shift (e.g. funds come from a different person, a different account, a different source than expected), firms must investigate and reassess risk, and record decisions made.
Where necessary, refuse to act: if you cannot satisfactorily establish legitimate source of funds/wealth, the transaction should not proceed. And if you obtain evidence that raises suspicions, you must file a suspicious activity report (SAR) with the National Crime Agency (NCA).

What You Can Actually Do in Your Firm — Practical Takeaways

Revisit your risk-based framework: now is a good time to review your firm-wide risk assessment and ensure that your “trigger points” for source-of-funds / wealth checks match what the SRA expects (especially in conveyancing, property purchases, high-value work, and matters involving foreign funds or third parties).
Train fee-earners and front-line staff: ensure those dealing directly with clients understand not just that documents are required, but why and how to assess them, record findings and flag red flags.
Use checklists and templates, and require firm-wide consistency. The SRA itself now provides a source-of-funds/wealth form to help firms standardise and document checks.
Document everything: reasoning, assessment, judgments, any decisions to proceed (or not), and follow-up steps if funding changes. That record is your safeguard if a regulator or tribunal wants to review the file.
Apply extra scrutiny to high-risk matters: residential/commercial property, funds from abroad, third-party payments, gifts, etc. Don’t treat conveyancing as “business as usual.”
Don’t treat AML as a one-off box tick: see it as continuous risk management: review, monitor, update.

Compliance as a Culture, Not a Back-Office Burden

If there’s one message from the SRA’s Review, it’s this: source-of-funds and source-of-wealth checks aren’t optional “nice-to-have,” nor are they a bureaucratic burden to be limited to the front end of a matter. They are, in effect, the first line of defence, and your firm’s reputation, ethical standing, and future depend on them being taken seriously.

Viewed in that light, compliance becomes not a chore, but a professional duty. One that reflects the trust clients place in solicitors and the public-interest role of the profession.

So, whether you’re a sole practitioner or part of a large firm: take a moment to check your processes, to engage your colleagues, to put in place robust record-keeping and monitoring. It might feel time-consuming. But done properly, it protects not just your clients, it protects your firm.