Is your firm ready for the SRA's 2025 AML data collection? Things law firms need to be aware of

The SRAs annual AML data collection exercise is more than a regulatory hoop to jump through – it’s a litmus test of your firm’s compliance culture and readiness to prevent economic crime.

From July 2025, all law firms in scope of the Money Laundering Regulations will need to respond to a detailed request for information about their anti-money laundering (AML) controls.

The key question for your Compliance Officer…can you answer all the questions confidently and compliantly?

Keep an eye on incoming regulatory reform later in 2025

Preparing in advance will benefit law firms two-fold. 

On 24 June 2025 the government’s new Industrial Strategy announced that HM Treasury will publish a package of amendments to the Money Laundering Regulations before the year-end, promising “clearer and more proportionate” rules and encouraging the wider use of digital-identity solutions. The stated aim is to improve effectiveness while trimming compliance costs for businesses by 25% during this Parliament.  On the flip-side, firms will need robust baseline data (exactly what the SRA is collecting this summer!) to measure the impact of any changes. Taking stock now of your FWRA, policies and training will put you in the strongest position to pivot quickly when the revised MLRs land.

This article highlights what firms should do now to prepare; not only to respond accurately to the SRA but to ensure their policies and procedures are fit for purpose in a rapidly evolving risk landscape.

What questions the SRA are asking this year in their AML questionnaire

This year’s questionnaire will go beyond basic tick-box compliance. It will include detailed questions such as:

• What percentage of your firm’s new AML matters in the last 12 months had Enhanced Due Diligence (EDD) applied?
• How many clients have you acted for in the last 12 months who were Politically Exposed Persons (PEPs) (excluding beneficial ownership PEPs)?
• How many times have you returned more than £5,000 from your client account in the last 12 months?

The regulator is using this data to identify outliers, trends, and potentially high-risk firms that may warrant further scrutiny.

Steps your practice can take now

Use the SRA data exercise as a prompt for a thorough AML compliance health check prior to completing the questionnaire. Key preparation steps include:

Review and update your firm wide risk assessment (FWRA)

Is your FWRA:

• Fully compliant with Regulation 18?
• Reflective of your current risk profile?
• Updated to cover any material changes in the past 12 months such as:
  • New staff or offices
  • New or increased exposure to overseas jurisdictions (whether FATF-listed or not)
  • New work types or service delivery models (e.g. remote onboarding)
  • Assessment of proliferation financing risks, now a growing focus

A strong FWRA is the cornerstone of your AML regime – and a weak one is a red flag to the SRA.

Refresh your AML policies, controls and procedures (PCPs)

Ensure they:

• Comply fully with Regulation 19
• Have been updated in line with the Legal Sector Affinity Group (LSAG) guidance (updated April 2025)
• Reflect operational realities in your firm (e.g. how onboarding, ongoing monitoring and file reviews are really done)

Assess the effectiveness of your Client and Matter Risk Assessment (CMRA)

A good start is to ask yourself:

• Is your CMRA bespoke to your firm’s services and risks?
• Do all fee earners use it consistently and compliantly?
• Is there a completed CMRA on every relevant file?

Gaps in client and matter-level assessments are among the most frequent compliance failures flagged by the SRA.

Evaluate your AML training programme

• Have all staff received appropriate AML training within the last 12 months?
• Was it tailored to individual roles and the specific risks identified in your FWRA?
• Can you evidence training records and attendance?

The SRA AML Thematic Training Review cautioned against generic, one-size-fits-all training, and advised firms to undertake ongoing, interactive, bespoke training.

Consider an Independent AML Audit

Under Regulation 21, many firms are now required to commission an independent AML audit. Even where not mandatory, an audit is a powerful way to:

• Benchmark your policies against the Money Laundering Regulations, LSAG Guidance and current best practice
• Identify gaps and weaknesses in implementation
• Provide reassurance to the SRA that you take AML risk seriously

If you’ve never had an independent audit, now is the time to consider it.  Find out more here.

Finally, a salutary reminder that – as it stands – the SRA’s growing enforcement powers now include unlimited fines under the Economic Crime and Corporate Transparency Act, making the stakes higher than ever.

We can help!

If your firm is unsure whether it can respond confidently to the 2025 data exercise, we can:

• Review and advise on your FWRA and AML PCPs
• Deliver tailored AML training for your team
• Support your data gathering and questionnaire completion
• Arrange or conduct an independent AML audit

Now is the time to take action – not just in response to an SRA knock at the door, but to safeguard your clients, your firm, and your reputation.