UK law firms and solicitors were fined a total of £2.6 million for anti-money laundering (AML) breaches in the year ending April 2026, despite signs of improving compliance across the legal profession, according to the Solicitors Regulation Authority (SRA).
The regulator’s annual anti-money laundering report highlights an increase in enforcement activity alongside improvements in firms’ risk assessments, internal controls and compliance procedures. However, recurring issues with client risk assessments and source-of-funds checks indicate that further work is needed to ensure firms meet their regulatory obligations.
The figures reflect the SRA’s continued focus on preventing money laundering, terrorist financing, sanctions evasion and other forms of economic crime.
The total £2.6 million in fines comprised 145 regulatory settlement agreements worth approximately £2 million, 14 fines imposed by SRA adjudicators totalling £364,000, and £228,000 in fines issued through the Solicitors Disciplinary Tribunal (SDT). All fines are paid to the Treasury.
The enforcement figures represent a significant increase compared with 2024/25, when the SRA concluded 58 regulatory settlement agreements worth £661,200. However, fines imposed through the SDT were more than twice as high in the previous reporting year, suggesting that the overall pattern of enforcement has changed.
The increase in settlement agreements may indicate that more firms are choosing to resolve regulatory matters through settlements rather than proceeding to tribunal proceedings. Nevertheless, the figures alone do not establish the reasons behind the change.
Despite the rise in fines, the SRA has identified encouraging developments in compliance across the profession.
Alexandra Jones, the SRA’s director of anti-money laundering, said the findings demonstrated continued progress and greater awareness of the risks associated with financial crime.
She highlighted the role of solicitors and law firms in protecting the integrity of the UK’s legal and financial systems, adding that preventing money laundering, terrorist financing and sanctions evasion remained a regulatory priority.
The report suggests that the profession is making progress in strengthening its compliance arrangements, although the regulator continues to identify shortcomings that require attention.
During the reporting period, the SRA completed 966 anti-money laundering compliance assessments. These reviews identified improvements in several areas, including firm-wide risk assessments, client and matter risk assessments, internal policies and procedures, sanctions controls, and assessments of proliferation financing risks.
The proportion of firms found to be non-compliant following proactive supervisory assessments also fell during the year. This suggests that the regulator’s supervisory work may be contributing to improvements in firms’ understanding and implementation of their obligations.
However, better overall compliance does not mean that all firms have adequate controls in place. The report highlights continuing weaknesses in the practical application of anti-money laundering requirements, particularly when firms assess individual clients and transactions.
The number of reports concerning suspected breaches of anti-money laundering regulations fell from 426 in 2024/25 to 336 in 2025/26.
Approximately half of these reports related to alleged failures to conduct appropriate risk assessments for clients or matters, or to carry out source-of-funds checks.
These recurring issues demonstrate the importance of applying AML procedures consistently rather than treating compliance as a purely administrative exercise.
Law firms are expected to understand the risks associated with their clients and transactions, maintain appropriate records and conduct the necessary checks before accepting instructions or proceeding with relevant work.
Failure to implement these controls can expose firms to regulatory action, financial penalties and potential reputational damage.
The SRA’s latest report presents a mixed picture for the legal sector. While the total value of fines increased substantially, the regulator also reported improvements in compliance assessments and a reduction in reports of suspected breaches.
For law firms, the findings reinforce the need to review AML policies regularly, ensure risk assessments are tailored to individual clients and matters, and maintain clear evidence of source-of-funds checks where required.
Firms should also ensure that staff understand their responsibilities, that internal procedures are followed in practice, and that compliance arrangements remain appropriate as risks and regulatory expectations evolve.
Although the latest figures may indicate that compliance is improving, recurring deficiencies show that firms cannot afford to become complacent.
The SRA’s message remains clear: effective anti-money laundering controls are essential to protecting the legal profession and the wider financial system, and firms must be able to demonstrate that their procedures work in practice.
