Introduction

This past year has been marked by significant progress in our efforts to prevent and detect money laundering, as we continue to prioritise anti-money laundering (AML) initiatives. The Economic Crime and Corporate Transparency Act has not only reinforced our existing regulatory objectives but has also introduced a new explicit objective to prevent and detect economic crime. We welcome these changes and continue to take decisive action against those who seek to exploit the legal sector for criminal purposes.

Our focus on preventing money laundering has driven us to explore further how we can target our actions. We are making increasing use of data to monitor how law firms manage the risk of money laundering. By analysing trends across thousands of files and firms, we can deliver supervision that is evidence-led, helping to further protect the sector from criminal exploitation. Our 2024 data collection exercise has provided valuable insight into the way firms are affected by the sanctions regime. It also allowed us to limit our sanctions checks to those firms who are directly affected, and to take a risk-based approach to our inspections.

We engaged with a broader cross-section of the profession, with a total of 833 firms having received either an onsite AML inspection or a desk-based review. This activity demonstrates our commitment to proactive oversight and risk-based intervention. While most firms demonstrated a strong understanding of their obligations and a clear commitment to compliance, the identification of non-compliance in nearly a third of cases highlights the continued need for sector-wide improvement and sustained regulatory attention.

The publication of the UK’s National Risk Assessment in July reaffirmed the high-risk profile of the legal sector in relation to money laundering and terrorist financing. We welcome the alignment of nine national economic crime priorities, developed in partnership with the National Crime Agency (NCA), the Financial Conduct Authority (FCA), Home Office, and HM Treasury. These priorities – covering areas such as professional enablers, sanctions evasion, politically exposed persons, and misuse of corporate structures – strengthen our regulatory focus and reinforce our shared responsibility to safeguard the sector from criminal exploitation.

We remain committed to preventing and detecting economic crime. In the coming year, we will continue to build on our progress, working closely with solicitors and law firms to maintain the highest standards of compliance and to protect the integrity of the legal sector.

I am proud of the progress we’ve made and grateful to the many professionals who share our dedication to upholding public trust and driving meaningful change.