Operation Machinize 2, a coordinated National Crime Agency crackdown conducted throughout October 2025, exposed the scale of criminal activity operating through UK high street businesses.
The results were stark: 2,734 premises targeted, 924 arrests, over £10.7 million in suspected criminal proceeds seized, and more than £2.7 million worth of illicit commodities destroyed.
For law firms handling commercial conveyancing, commercial leasing, and property transactions, these figures represent more than just impressive enforcement statistics. They demonstrate that the businesses your clients may be buying, selling, leasing, or renting commercial premises could be fronts for money laundering operations happening in local communities across England and Wales.
While residential conveyancing has rightly been treated as high-risk under the Money Laundering Regulations 2017, the commercial property sector presents equally significant, and often more complex, money laundering vulnerabilities that law firms cannot afford to overlook.
The High Street Reality: What Operation Machinize Revealed
Operation Machinize 2 involved every UK police force and Regional Organised Crime Unit, working alongside Home Office Immigration Enforcement, Trading Standards, HMRC, and Companies House. The operation targeted cash-intensive businesses being exploited for criminal purposes across multiple sectors.
The enforcement outcomes paint a picture of widespread criminality:
- 70kg of cannabis removed from premises
- 111,097 illegal vapes seized
- 4.5 million illegal cigarettes and 622kg of illegal tobacco (representing £3.4 million in evaded duty taxes)
- 341 Referral Notices issued for illegal working and renting (businesses facing fines up to £60,000 per worker, landlords up to £20,000 per tenant)
- Over 450 companies referred to Companies House for further investigation
Rachael Herbert, Director of the National Economic Crime Centre at the NCA, made the scope clear: “Operation Machinize targets businesses on our high street that are being used as cover for a wide range of criminality, making our communities less safe and less prosperous.”
Why This Matters for Commercial Property Work
Law firms are inevitably involved in the commercial property transactions that enable these businesses to establish themselves. Whether acting for buyers purchasing commercial premises, landlords leasing retail units, tenants taking on commercial leases, or sellers disposing of business properties, the legal sector provides a critical gateway for businesses entering the commercial property market.
The NCA’s Sal Melki acknowledged this reality: “While there is organised crime occurring at the top of the pyramid, we do not underestimate the aggregated effect that thousands of shops engaged in so-called lower level criminality is having on our communities and the criminal supply chains that profit from them.”
This involvement is, in the vast majority of cases, wholly inadvertent. Firms have no intention of facilitating criminal enterprises. Yet even inadvertent involvement can result in untold reputational damage, regulatory consequences, and in some circumstances, criminal liability.
The Cash-Intensive Business Threat
Operation Machinize specifically targeted businesses that use cash transactions as a means of laundering criminal proceeds.
Through our work with law firms across England and Wales, we have seen first-hand how commercial property transactions involving these sectors require heightened scrutiny.
In its most recent Sectoral Risk Assessment, the Solicitors Regulation Authority highlighted specific client risk profiles when involved in physical cash intensive sectors or businesses, stating: “The nature of the client’s business might increase risk if it is cash-intensive (e.g. take-aways, car washes, nail salons and lessors of residential or commercial property) and therefore presents a greater risk of disguising illegal funds within legitimate payments.” The guidance adds, “The client’s sector or area of work is also a significant risk factor, in particular if they are associated with a higher risk of corruption or being used for money laundering, for example those from the arms trade, casinos, or trade in high value items (e.g. art or precious metals).”
When law firms act in the purchase, lease, or rental of commercial premises for businesses operating in these sectors, enhanced due diligence is not optional, it is essential.
The Residential Conveyancing Risk Remains
While this article focuses on commercial property, it is important to acknowledge that residential conveyancing continues to present significant money laundering risks that firms must take seriously.
Property transactions remain one of the primary methods through which criminal proceeds are introduced into the legitimate economy. Whether dealing with residential or commercial property, firms must apply rigorous customer due diligence, conduct thorough source of funds enquiries, and remain alert to red flags indicating potential money laundering. Read our previous article, ‘A Warning to Conveyancing Firms’.
The Risk-Based Approach in Practice
The Money Laundering Regulations 2017 require firms to apply a risk-based approach to AML compliance. This does not mean treating every transaction with equal scrutiny, it means concentrating enhanced diligence efforts on matters that present elevated risk.
At RACO, we help firms implement this proportionate approach effectively. For the vast majority of your matters, straightforward client due diligence conducted efficiently will satisfy regulatory requirements. The challenge is identifying which matters require deeper investigation and allocating resources accordingly.
FCA Supervision To Bring Further Scrutiny
With the Financial Conduct Authority (FCA) set to assume AML supervision responsibilities, the importance of robust, demonstrable CDD processes becomes even more critical.
The FCA’s supervisory approach is fundamentally different from professional body supervision. They expect evidence that your CDD processes work in practice, not just policies that look good on paper.
Regular CDD reviews, properly documented risk assessments, and clear audit trails showing when and why decisions were made will be essential.
Firms that have outsourced their CDD to specialists like RACO will be well-positioned for this transition. Our processes are already designed to meet the data-driven, outcome-focused standards the FCA will apply.
Read our comprehensive guide: Preparing Your Law Firm for the FCA’s AML Supervision.
Using Technology to Work Smarter
The risk-based approach works best when supported by appropriate technology. This is why RACO partners with Verify 365, the award-winning AML, KYC, and KYB client onboarding platform designed specifically for the legal sector.
For routine, low-risk commercial property matters, Verify 365 enables firms to complete client due diligence efficiently in minutes, freeing up compliance resources to focus on higher-risk transactions that require enhanced scrutiny.
For commercial property transactions involving cash-intensive businesses or other risk factors, the platform’s comprehensive checks provide the detailed due diligence foundation that firms need before conducting additional enhanced due diligence procedures.
Verify 365 is also a UK Government-certified digital identity service provider (IDSP) and helps firms achieve HM Land Registry ‘Safe Harbour’ status through its biometric verification technology—critical for property transactions.
This technology-enabled approach means firms can handle straightforward matters efficiently while reserving senior fee earner time and compliance resources for the edge cases that genuinely warrant deeper investigation.
The Importance of Recording Your Decision-Making
Whatever due diligence you conduct, whatever concerns you identify, whatever conclusions you reach, record it all.
If you identify risk factors but get comfortable through enhanced due diligence, document what you did and why you concluded the matter could proceed. If you identify concerns that crystallise into suspicion, record what information led to that conclusion.
This documentation serves multiple purposes:
- Regulatory Defence: If your AML framework is ever scrutinised, clear records demonstrate you took obligations seriously and applied proper consideration to risk.
- Internal Learning: Recording decisions helps train less experienced staff and builds institutional knowledge about risk assessment.
- SAR Support: If concerns do reach the level requiring a SAR, comprehensive notes provide the necessary detail for an effective report.
The absence of documentation is regularly cited in SRA enforcement outcomes as evidence that proper procedures were not followed, even when firms insist, they conducted adequate due diligence.
Filing Suspicious Activity Reports: Critical Intelligence
Some firms hesitate to file SARs, concerned that reports disappear into a database without consequence or that reporting will damage client relationships.
The reality is very different. The 924 arrests and £10.7 million seizures during Operation Machinize were built on intelligence gathered from multiple sources, including SARs filed by professionals across regulated sectors who identified concerning activity.
Filing a SAR does not mean you are accusing your client of criminality. It means you have identified circumstances that give you reasonable grounds for suspicion and are fulfilling your legal obligation to report those concerns to the appropriate authority.
The decision whether to act rests with the National Crime Agency, not with you. Your responsibility is to identify and report suspicion when it arises. That responsibility protects both the integrity of the legal sector and the wider community from the harm caused by money laundering.
Training: Making Compliance Real and Relevant
One of the most effective ways to improve AML compliance across a firm is to ensure everyone understands why these obligations exist—not just what the rules require.
At RACO, our training approach focuses on real-world context. Sharing case studies like Operation Machinize, discussing NCA press releases, or examining BBC coverage of raids on local businesses provides context that transforms AML from abstract regulatory requirements into tangible protection against real-world harm in your communities.
When staff understand that AML obligations exist to prevent money laundering through businesses on their local high streets—not just to tick compliance boxes—the rules stop being bureaucratic hurdles and become meaningful protections.
This approach to training satisfies more than just the annual training obligation under MLR 2017. It embeds genuine awareness throughout the firm and turns staff into an effective first line of defence against money laundering risks.
Our training programmes cover:
- Real-world case studies including Operation Machinize enforcement outcomes
- Sector-specific red flags relevant to your practice areas
- Practical application of the risk-based approach
- When and how to conduct enhanced due diligence
- SAR preparation and filing procedures
- Using technology platforms effectively for compliance
Where RACO Can Help
At the Regulation and Compliance Office, we work exclusively with law firms across England and Wales, providing practical AML compliance support that recognises the commercial realities of legal practice.
We understand that commercial property work presents specific challenges. Clients often operate in cash-intensive sectors. Source of funds enquiries can be complex, particularly for businesses with diverse revenue streams. Determining when enhanced due diligence is required involves nuanced judgment calls.
Our services are designed to provide the specialist support firms need without creating unnecessary administrative burden:
Regulation & Compliance Service: Comprehensive AML compliance covering firm-wide risk assessments, policies and procedures, ongoing monitoring, and annual Regulation 21 audits. This service ensures your entire compliance framework is robust and maintained.
Due Diligence & Risk Assessment Service: We handle client due diligence, enhanced due diligence, and client and matter risk assessments on your behalf. Your fee earners instruct matters; we ensure you’re compliant with MLR 2017.
Regulation & Compliance Outsource Guidance and Support: Our compliance managers become your compliance team, taking on day-to-day responsibilities of COLPs, COFAs, MLROs, and MLCOs. Your staff get expert support when they need it; your compliance officers get the burden lifted.
MLR 2017 Regulation 21 Independent Audit: As a genuinely independent body, we provide audits that satisfy Regulation 21 requirements and identify issues before regulators find them.
AML Training: Practical training for all staff that covers obligations, red flags, and real-world examples. We make the “why” clear and ensure people understand their role in protecting the firm.
Take Action Before Issues Arise
The businesses raided during Operation Machinize did not appear suspicious on their face. They operated on high streets across England and Wales, presenting as legitimate enterprises. Many were precisely that, legitimate businesses with no criminal involvement.
The challenge for law firms is identifying which commercial property transactions involve the minority of businesses that are not legitimate, and applying appropriate due diligence to protect the firm from inadvertent involvement in money laundering.
This is not a problem that firms can solve by applying generic policies or hoping their current approach is adequate. It requires:
- Specialist knowledge of money laundering typologies in commercial property
- Practical experience assessing when enhanced due diligence is required
- Technology platforms that enable efficient compliance for routine matters
- Proportionate allocation of resources based on risk
- Comprehensive documentation of decision-making
- Regular training that makes compliance real and relevant for staff
If your firm handles commercial conveyancing, commercial leasing, or acts for landlords and tenants in commercial property matters, now is the time to review your AML procedures with specialist support.
Contact RACO Today
To discuss how RACO can support your firm’s AML compliance in commercial property matters, please contact us:
Telephone: 0203 985 8550
Email: info@regulationandcomplianceoffice.co.uk
Online Enquiry: Complete our contact form
Our compliance specialists provide practical, sector-specific guidance that enables law firms to meet their obligations without hindering commercial operations. We work with firms of all sizes, tailoring our approach to each practice’s working methods and risk profile.
