On 25 March 2026, HM Treasury laid the Money Laundering and Terrorist Financing (Amendment) Regulations 2026 before Parliament. Following debate in both Houses, most provisions are expected to come into force in late June or early July 2026, with some crypto-specific measures following a separate timeline.

These amendments are not aimed at overhauling the existing framework, but there will be targeted, practical changes to improve proportionality, close loopholes, and align the UK regime more closely with FATF standards.

For RACO members, particularly law firms and compliance-focused businesses, several changes demand immediate attention.

For those firms on our fully managed services, your compliance manager will have been in touch to discuss the changes to your policies, controls and procedures, including your client care letters and engagement terms.

What Changes Firms Need to Be Aware Of

Below, we cover some of the core amendments that firms will need to be aware of and that require attention.

• CDD thresholds are now in sterling: All monetary thresholds in the Money Laundering Regulations 2017 have been converted from euros to pounds sterling, removing the need for ongoing currency conversions. The key figures to update in your policies and systems are: £10,000 for high-value transactions, including property lettings and art market sales, £800 for one-off occasional transactions (down from approximately £870), and £150 load/£50 balance limits for anonymous prepaid e-money products.

If your firm’s compliance procedures, engagement letter templates, or onboarding checklists still reference euro thresholds, they need updating now.

• The EDD trigger has been refined: One of the most practically significant changes for law firms is the clarification of when Enhanced Due Diligence applies. The current wording requires EDD for transactions that are “complex or unusually large.” This has led to over-compliance, with firms applying EDD to routine but structurally complex matters.

The amended wording limits mandatory EDD to transactions that are “unusually complex or unusually large given the typical size and nature of transactions in that context.” In practical terms, a routine property purchase via a company structure no longer automatically triggers EDD simply because it involves multiple parties. EDD should be reserved for transactions that genuinely stand out as abnormal against your firm’s usual work. This is a meaningful reduction in administrative burden, provided your risk assessment criteria are updated to reflect the new threshold.

• Pooled client accounts now carry new obligations: Law firms that hold pooled client accounts (PCAs) face new requirements on both sides of the relationship. Banks offering PCAs must now document their risk assessment, understand the purpose of the account, and assess the money laundering risk associated with its use. On the firm’s side, if your bank requests identity information about the clients whose funds sit in the account, you are now obliged to provide it, subject to legal privilege protections. The Regulations make clear that disclosure under the PCA provisions does not breach a duty of confidentiality owed by a professional legal adviser, and that legally privileged information does not need to be disclosed. Even so, your team should understand exactly where those limits fall.

Firms should also maintain written records of all funds paid in and out of pooled client accounts for a minimum of five years. Whilst most law firms already do this under the Solicitors Accounts Rules, it is now an explicit AML obligation. Review your engagement letters to confirm they address the possibility of identity information being shared with your bank for compliance purposes.

• Trust registration requirements are widening: The Trust Registration Service is being extended to capture non-UK trusts that acquired UK land or property before 6 October 2020 and still hold it. Previously, those trusts fell outside the registration requirement. If you advise clients with offshore trust structures holding UK property that pre-date 2020, you should be identifying those trusts now and advising on the obligation to register within six months of the regulations coming into force.

New exclusions have also been introduced for low-value “micro-trusts” (assets under £2,000, no UK land, income under £5,000 per year, and not previously holding assets above £10,000), short-term deeds of variation trusts within two years of a death, and certain Scottish survivorship destination revocations. The automatic registration trigger for Stamp Duty Reserve Tax has also been removed.

Review your client trust list against these criteria. Some trusts currently on the register may qualify for removal, and some not yet registered may now need to be added.

• Country-based EDD is narrowed to FATF blacklist jurisdictions: The mandatory jurisdiction-based EDD trigger has been narrowed. Previously, firms were required to apply EDD to any business involving a country on FATF’s grey list or blacklist. The amendment restricts mandatory EDD to countries on FATF’s “Call for Action” list. Dealing with clients or transactions connected to grey-list countries will no longer automatically mandate EDD. However, those jurisdictions remain a relevant risk factor under your wider risk-based assessment, and firms should continue to consider them as part of their customer risk profiling.

• Sale of “off-the-shelf” companies now in scope: The list of activities that bring a legal practice within the scope of the Money Laundering Regulations has been expanded to include the sale of “off-the-shelf” companies. Whilst most law firms do not engage in this type of work directly, it is a useful reminder when conducting CDD on corporate clients that such companies can be exploited for laundering purposes. If your firm does facilitate the sale of off-the-shelf companies, you are now firmly within the TCSP regime for that activity.

• Cryptoasset regulation: Cryptoasset firms are fully brought within scope of the AML regime and from 1 February 2027, EDD becomes mandatory for crypto correspondent relationships (where banking services are provided by one bank to another), with a ban on dealings with shell banks. A new ownership and control regime (aligned with Financial Services and Markets Act thresholds) introduces notification requirements and enforcement risk. Implementation will be phased through October 2027.

What Firms Must Do Now

The changes are practical rather than fundamental, but they require prompt action before the late June or early July commencement date. As a starting point, firms should:

• Review and update all references to euro thresholds across their AML policies, onboarding documentation, and transaction monitoring systems.
• Update EDD criteria to reflect the “unusually complex or unusually large” threshold.
• Review pooled client account procedures, including how requests for underlying client information will be assessed, documented and responded to, and ensure staff understand where legal privilege and confidentiality protections apply.
• Identify any trust clients newly brought into scope of the Trust Registration Service, and assess whether any existing registrations qualify for removal under the new de minimis rules.
• Recalibrate your country risk matrix to distinguish between mandatory EDD (FATF Call for Action) and risk-based EDD (everything else).
• Make sure your Practice Wide Risk Assessment and Policies, Controls and Procedures reflect the amendments, and that the rationale for your interpretation is documented.
• Practices advising crypto clients or handling crypto-related funds must strengthen onboarding, due diligence and governance frameworks

Supervisors are likely to focus on how firms have interpreted and implemented the revised requirements, so the audit trail matters as much as the changes themselves.

For further information on the 2026 amendments, including guidance from the SRA and the Law Society, review the resource link below:

The Law Society – lawsociety.org.uk: Money Laundering Regulations review

SRA News – sra.org.uk: Government to amend money laundering regulations

Regulatory Guidance and Support from Industry Experts

For those firms on our fully managed services, your compliance manager will have been in touch to discuss the changes to your policies, controls and procedures, including your client care letters and engagement terms.

For firms not already on one of our compliance services, 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 about the Regulation and Compliance Office and to discuss how we may be able to assist in accelerating your risk management, compliance, or 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 at info@regulationandcomplianceoffice.co.uk.