Eilish Cullen, Head of Partnerships, and Regulatory, AML, GDPR Compliance & CQS Specialist.
The SRA has published its Sectoral Risk Assessment, which was updated on 31 July 2025. To remain compliant with your anti-money laundering (AML) obligations, I recommend the following:
Update your firm‑wide risk assessment (FWRA)
- Under Regulation 18 and 18A of the Money Laundering Regulations 2017, every firm must maintain a written FWRA. The SRA’s sectoral assessment must be incorporated into your firm’s FWRA when drafting or updating it.
- Ensure that the latest sectoral risk assessment dated 31 July 2025 is explicitly referenced, reflecting emerging risks (e.g., political regime change, capital flight from high-risk countries, PEP influx, informal transfer systems).
Keep the FWRA under active review, updating it whenever there’s a material change in client base, jurisdictions, or risk environment, and always after a new sectoral update by SRA.
Reflect sector-level risks in client and matter assessments
- Your client and matter risk assessments must explicitly reflect the heightened risks flagged at sector level (such as property deals linked to unstable regimes or PEPs from specific jurisdictions).
- Use the SRA-provided client and matter risk template as a foundation, then adapt it to reflect your firm’s work, policies, and risk appetite.
Re-align AML policies, procedures, and controls
- After updating your FWRA, ensure your firm’s policies, controls, and procedures are updated accordingly to mitigate identified risk areas, including enhanced due diligence on PEPs, fund source validation, and screening related to emerging jurisdictions or informal transfer channels.
- Make sure all staff, particularly fee‑earners working on in‑scope matters, have access to relevant documentation and training. Avoid risk-siloing within compliance teams, everyone involved in file work needs access to risk insights.
Prepare for the July 2025 annual AML & sanctions data exercise
- Between 7 July and 15 August 2025, all SRA‑regulated firms must submit their annual AML and sanctions data return via mySRA. A sample questionnaire is now available and should be reviewed early.
- The submission must be done by an authorised compliance role (e.g., MLRO, MLCO, COLP, authorised signatory). Even if your firm has nothing to report, you must submit a nil return.
- Data requested includes: total in-scope work, contact with sanctions regime and designated persons, number of SARs, PEPs identified, high-risk matters, and overall AML control status.
Embed robust, ongoing AML training and oversight
- Align training and oversight with the revised LSAG AML Guidance, approved by HM Treasury and effective from 23 April 2025. All responsible personnel must understand updated sanctions and due diligence expectations.
- Provide regular refresher training for all fee-earners and compliance staff, particularly covering emerging risks, jurisdiction-specific considerations, and changes in the sanctions regime.
- Continuously monitor for potential compliance gaps. If weaknesses are identified (especially during internal monitoring or client/matter review) take prompt corrective action rather than waiting for an SRA intervention.
What your next steps are:
- Update and document your FWRA, referencing the 31 July 2025 sectoral risk update.
- Align client/matter assessments with emerging risks flagged at sector level.
- Ensure AML policies, procedures, and controls reflect new threats and are accessible firm‑wide.
- Prepare for and submit the annual AML and sanctions questionnaire on mySRA between 7 July and 15 August 2025.
Train and engage staff regularly, embedding the latest LSAG guidance into everyday practice.
Action points (next steps)
Action | Why it matters |
Review and update FWRA now | To meet Reg 18 obligations and reflect sector‑level risks |
Populate client/matter risk templates | Embeds granular risk decision‑making at file level |
Conduct a policy / controls audit | Ensures consistency with new sectoral assessment |
Download sample questionnaire and test access | Minimises risk of late or incorrect submissions |
Schedule AML refresher training | Keeps staff up to date, reduces risk exposure |
As always, my colleagues and I here at Teal Compliance are here to support, offering solutions and implement procedures to keep your law firm safe.
Got questions? Need help figuring out your next steps? Drop me or one of my colleagues a message. Gary Yantin is our go-to problem solver!
Thanks for reading, Eilish.
