SRA Proactive Supervision Uncovers Widespread Failures in Firm-Wide and Client Matter Risk Assessments

The Solicitors Regulation Authority (SRA) has recently published the decision details of three separate regulatory settlement agreements following investigations by its AML Proactive Supervision Team.

The firms have each been fined for failures relating to firm-wide risk assessments (FWRAs) and client matter risk assessments (CMRAs) under the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017). The fines of £25,000, £6,321, and £6,000, respectively, serve as a clear reminder that the SRA continues to treat AML risk assessment failures as a serious regulatory matter.

£25,000 Fine for Failure to Conduct Client and Matter Risk Assessments

A Scunthorpe based firm was fined £25,000 plus costs after the SRA found that between June 2017 and January 2025, the firm had failed to conduct client and matter risk assessments (CMRAs) as required by Regulation 28 of the MLRs 2017. Whilst the firm’s FWRA, policies, controls and procedures were found to be compliant at the time of the review, the absence of CMRAs at file level meant it could not demonstrate that individual client and matter risks had been identified and managed. The SRA assessed the conduct as a persistent disregard of regulatory obligations and noted that the firm only became compliant following SRA intervention.

You can read full details on the decision here: https://www.sra.org.uk/consumers/solicitor-check/047538/

£6,321 Fine for Firm-Wide Risk Assessment and Policies, Controls, and Procedures Failures

A Northumberland firm was fined £6,321 plus costs after the SRA found that it had failed to maintain adequate records of its firm-wide risk assessment and, separately, had not established or maintained compliant policies, controls and procedures (PCPs) from June 2017 until May 2024. The SRA noted that while fee earners may have been considering risk informally, those considerations were not recorded, meaning there was nothing to demonstrate what had been assessed on each client file. Risk assessments without documentation offer no demonstrable protection – for the firm, its clients, or the regulator.

You can read full details on the decision here: https://www.sra.org.uk/consumers/solicitor-check/073946/

£6,000 Fine for Failure to Have Compliant FWRA or Up-to-Date PCPs in Place

A Firm in Waltham Abbey has been fined £6,000 plus costs following findings from the SRA that between June 2017 and January 2026, the firm had neither a compliant FWRA nor up-to-date PCPs in place. The SRA also identified inaccuracies in client ledger records across three of the six files reviewed, adding a further layer of concern. With over eighty per cent of the firm’s work falling within conveyancing – an area the SRA considers high risk for money laundering – the absence of proper AML controls was treated as particularly serious.

You can read full details on the decision here: https://www.sra.org.uk/consumers/solicitor-check/563909/

Firm-Wide and Client Matter Risk Assessments – Meeting the Regulatory Requirements

The MLRs 2017 require all firms in scope to maintain a documented, up-to-date firm-wide risk assessment that identifies and assesses the specific money laundering and terrorist financing risks the firm faces. Alongside this, firms must have policies, controls and procedures in place to manage those risks effectively, as well as ensuring that individual client and matter risk assessments are completed and recorded at file level.

These recent decisions highlighted here are not isolated cases. There have been several recent examples where the SRA has been stringent in its dealings with anyone it found in breach of its rules. The regulator has made it clear it will focus on all cases of misconduct and compliance failures, not just on areas of obvious regulatory requirements such as FWRAs, CMRAs, and AML PCPs.

Regulatory Guidance and Support from Industry Experts

At the Regulation and Compliance Office (RACO), we work with firms and their COLPs, COFAs, and MLROs to help them manage risk, compliance, and regulatory requirements through a range of training and outsourced support solutions. For many firms, the gap between believing they are compliant and being able to demonstrate compliance is significant, and it’s a gap the SRA’s Proactive Supervision Programme is designed to expose.

Our goal is to ensure the firms we work with have and retain a compliant structure, enabling the firm, its managers, and owners to focus on running their businesses and serving their clients.

If you believe your firm may be at risk or wish to confirm your firm is achieving the required standard, RACO provides a range of solutions, including:

• Detailed Risk Management and Compliance Review – which provides firms with a structured, firm-wide gap analysis of your approach to risk, supervision, and regulatory compliance. Designed for law firms and professional indemnity insurers, the review delivers a comprehensive evaluation of your current framework, identifies areas of exposure and sets out clear, pragmatic recommendations for improvement.
• Client Due Diligence & Risk Assessment Service – our Due Diligence and Risk Assessment Service is designed to provide an outsourcing option for the completion of Client Due Diligence and completion of the Client and Matter Risk Assessment, including, where necessary, perform source of funds and source of wealth and enhanced due diligence.
• Auditing and File Reviews – procedural staff, systems, and files to ensure the procedures are up to the required standard and being implemented at case level with a report of the outcome.
• Training – whether you seek training on a 1-2-1 or group basis, online or in person at your chosen location, RACO has a range of training courses and mentoring programs to suit any legal practice. We can also design bespoke courses tailored to your firm’s needs. We have provided training to firms of all sizes, and our clients range from sole practitioners and CLC practices to multi-service firms with overseas offices.

• Packaged Solutions – Implementation of robust solutions to ensure the firm achieves compliance and then maintains compliance through the provision of ongoing support and assistance: –
  • SRA Compliance Essentials – SRA Compliance Essentials gives you ongoing, specialist support to meet SRA Standards and Regulations and, where relevant, Anti-Money Laundering Regulations. It’s designed to give you peace of mind and free up time, while helping you demonstrate a robust compliance environment to the SRA and insurers.
  • Fully Outsourced Risk and Compliance Management – Dedicated, day-to-day risk and compliance management for law firms. The Risk & Compliance Management service provides your firm with an outsourced compliance team, delivering structured register administration, regulatory guidance and monthly reporting to support your COLP, COFA and MLRO. Designed to ensure ongoing oversight, documented monitoring and clear evidence of effective compliance management.

Speak to Our Compliance Specialists

For more information on the Regulation and Compliance Office and to discuss how we may be able to assist in accelerating your risk management or compliance and regulation, or to simply keep this up to date, please call us on 0203 985 8550, complete the online enquiry form below, or email us info@regulationandcomplianceoffice.co.uk.