Rhiannon Davies, Associate. Please note, the original post was on my LinkedIn feed.
The Legal Sector Affinity Group Anti-Money Laundering Guidance for the Legal Sector has been updated and takes effect from today, Wednesday 23 April 2025.
If you recall, there was an addendum published in December 2023 and the LSAG guidance has now been updated to reflect HM Treasury’s approval of this.
What has been updated in the LSAG Guidance?
There is detail on this within the guidance itself on pages 221 to 228 but here are a few:
⏩ Change to the wording used for beneficial owner shareholders from “25% or more” to “more than 25%”
⏩ New definition of high-risk third country following the removal of Schedule 3ZA from the Money Laundering Regulations
⏩ Additional information regarding the Economic Crime Levy – payable if your annual turnover exceeds £10.2 million.
⏩ Additional information on supply chain risk
⏩ New subsections relating to The Register of Overseas Entities, De minimis exemption and mixed property transactions
⏩ Updated guidance where you received contributions from third parties towards source of funds
⏩ Text added in reference to the new regulation on Domestic PEPs
What do you need to do as a Law Firm?
📖 Read the new guidance: the SRA website link goes to the 2023 version (I believe it is something to do with needed to clear your cache), so I recommend using the Law Society of Scotland link:
📖 Update your Firm/Practice Wide Risk Assessment to confirm that you have read and understood the new guidance.
📖 Document in your Firm/Practice Wide Risk Assessment, any actions you are going to be taking as a result of the changes.
📖 Update your other AML policies and procedures if required – this new guidance replaces the guidance issued in 2023 and the December 2023 addendum so make sure any references to either of these documents in your AML policies and procedures are removed and replaced with the 2025 guidance.
📖 Let staff know of any changes that you make to your AML policies and procedures.
LSAG Guidance Update April 2025 in detail
- Paragraph 4.2.2: Changed “25% or more” to “more than 25%”.
- Paragraph 4.7: Added information about the Economic Crime Levy (ECL) registration and payment requirements for businesses with over £10.2 million in annual turnover.
- Paragraph 5.1.1: Added information on supply chain risk, emphasising understanding the end-to-end activities and identifying potential risks.
- Paragraph 5.6.2.1: Amended to remove reference to Schedule 3ZA and substitute the new definition of high-risk third countries (HRTCs) based on FATF lists.
- Paragraph 6.14.1: Clarified that the Economic Crime and Corporate Transparency Act 2023 (ECCTA) will not affect regulation 28(9).
- Paragraph 6.14.4: Amended text regarding obtaining documents to verify name, address, and date of birth.
- Paragraph 6.14.10: Amended text regarding identifying and understanding the ownership and control structure of legal entities.
- Paragraph 6.14.11.4: Added a new subsection on The Register of Overseas Entities.
- Paragraph 6.16.2: Changed “25% or more” to “more than 25%”.
- Paragraph 6.17.2.1: Removed and substituted paragraphs, and further amended one paragraph on source of funds.
- Paragraph 6.19.1: Amended to reference the new definition of high-risk third countries.
- Paragraphs 6.19.3.1 to 6.19.3.3: Updated links to FCA guidance on politically exposed persons (PEPs) and added text on domestic PEPs.
- Paragraph 12.6: Added links to guidance on discrepancy reporting.
- Paragraph 13.4.3: Removed a redundant footnote.
- Paragraph 16.4: Added two defenses introduced in ECCTA.
- Paragraph 16.4.4: New subsection on the de minimis exemption.
- Paragraph 16.4.5: New subsection on mixed-property transactions.
- Paragraph 16.7.4: Added text on jurisdictional issues.
- Paragraph 16.18.1: Changed “less than 25% ownership” to “25% or less ownership”.
- Paragraph 16.18.2: Changed “ownership thresholds below 25%” to “ownership thresholds to 25% or less”.
Of course, if you are an ASK TEAL member, or you are a client of ours through our SORTED programmes you will be updated and advised accordingly.
If you’d like Teal Compliance support either for an audit or to work with us as your outsourced trusted compliance partner, please do get in touch, we’d love to hear from you.
