The Law Society has expressed concerns that the UK government’s proposed changes to the anti-money laundering (AML) regulatory framework will not significantly reduce the regulatory burden on solicitors. Despite government efforts to make the Money Laundering Regulations (MLRs) more effective and proportionate, the legal profession is likely to face continued challenges in navigating AML compliance.
Background and Context
AML regulations are critical in the fight against economic crime, including money laundering and terrorist financing. However, the rules have been regarded by many in the legal profession as increasingly complex and burdensome. The existing MLRs, which implement international standards such as those set by the Financial Action Task Force (FATF), already require solicitors and law firms to conduct extensive customer due diligence (CDD), risk assessments, and ongoing monitoring.
In July 2025, the UK government published its formal response to a 2024 consultation on the MLRs. The consultation sought stakeholder views on improving clarity, risk-based application, and proportionality in AML regulations. The government expressed intentions to refine the regulations to streamline processes, particularly for solicitors and legal businesses, without compromising the effectiveness of AML controls.
Law Society’s Position
The Law Society acknowledges that while the government’s intent to revise the MLRs toward a more targeted and risk-based approach is a positive step, the proposed changes will not appreciably reduce the compliance workload or regulatory pressures for solicitors.
Key points raised by the Law Society include:
- The new regulatory proposals maintain extensive obligations for solicitors, including enhanced due diligence requirements in complex transactions and the need for comprehensive risk assessments.
- The Law Society warns that these obligations still demand significant changes to firms’ AML systems and controls, potentially increasing the time and resources needed to comply.
- There is concern about the continued complexity in defining beneficial ownership and politically exposed persons (PEPs), now widened to include domestic PEPs and additional categories, which will require law firms to adapt their client vetting processes further.
- The regulatory environment remains challenging due to short implementation timeframes and delayed guidance approval. The Law Society urged for a proportionate and pragmatic supervisory approach, allowing firms adequate time to adjust.
- Although the government plans for clearer, sector-specific guidance and intends to streamline supervisory regimes, the Law Society highlights that progress is incremental and reforms to the supervision structure are still under consideration.
Proposed Changes by the Government
Among the government’s proposals are adjustments intended to make AML requirements more aligned with actual risk levels:
- More targeted CDD requirements: Enhanced due diligence would be mandatory only for transactions deemed unusually complex rather than all complex transactions, aiming to reduce unnecessary burdens.
- Reinforcement of a risk-based approach: Firms would be expected to use the UK National Risk Assessment (NRA) as a key tool in conducting their own risk assessments, although the government decided not to make explicit legislative mandates in this regard due to feedback cautioning against rigid prescriptions.
- Improvements in guidance coherence: The government intends to produce clearer, more coherent AML guidance tailored to the distinct needs of the legal sector, to aid compliance efforts.
- Reforms in supervisory roles: The government is exploring consolidation or simplification of AML supervisory bodies to enhance oversight efficiency.
Challenges Remain
Despite these intentions, the Law Society and other stakeholders note that AML remains the single biggest regulatory burden facing law firms in 2025. Financial crime risk is evolving, requiring ongoing adaptations in law firms’ AML frameworks. The legal profession continues to grapple with:
- Increased demands for documentation and verification of client information, including deeper investigations into corporate structures and beneficial ownership.
- The expansion of definitions for high-risk client categories necessitating extended monitoring and due diligence.
- The technical complexity and volume of required compliance documentation.
- The timing and coordination challenges of supervisory bodies issuing unified guidance under new Treasury protocols.
Expert Commentary
Amy Bell, chair of the Law Society’s money laundering task force, emphasized that the fundamental theme of the regulations is the need for a robust risk-based approach. She highlighted the practical implications for legal firms, such as the need to expand customer due diligence to include constitutional documents like articles of association, which could considerably increase processing time.
Paul Bennett, a legal compliance expert, described AML regulation as “the biggest regulatory burden facing law firms in 2025,” underscoring the challenges firms face balancing regulatory compliance with efficient legal service delivery.
Outlook for Legal Firms
Legal professionals are advised by the Law Society to remain vigilant and proactive in adapting to the evolving AML landscape. Current regulations remain in force pending any formal changes, and solicitors should familiarize themselves thoroughly with existing and proposed requirements.
The Law Society has committed to updating its members as further developments arise, including the publication of official notifications and sector-specific guidance.
Conclusion
Although the UK government is working toward refining AML regulations to enhance efficiency and proportionality, the Law Society indicates that the proposed changes are unlikely to significantly ease the substantial regulatory burden borne by solicitors. The ongoing complexity of AML compliance demands continued attention, resources, and adaptation from legal professionals to meet both regulatory expectations and the critical imperative of preventing economic crime.
The dialogue between the government, supervisory bodies, and the legal profession remains crucial in shaping a balanced AML framework fit for future challenges while acknowledging the operational realities faced by law firms today.
AML Editor’s article was originally published in amlintelligence on August 11, 2025