Beware the Headlines

If I had to pinpoint what distinguishes truly excellent compliance professionals from a merely safe pair of hands, it would be this one habit: when they have a question, they go to the root source. They don't only rely on headlines or the way it's always been done or what Dean in Onboarding swore blind was the right answer. They grit their teeth and actually read the Proceeds of Crime Act, the Money Laundering Regulations and, if necessary, the case law. It's rarely fun but I promise you that there is all manner of shiny treasure inside, buried beneath the dust and verbosity.

The two big news items this month - the Court of Appeal decisions in Mazur and Dentons - have both broadly been received as a slap down to the SRA that should make us all breathe a little easier. However, when you read the judgements – okay, the conclusions sections (I’m thorough, not sadistic!) – this is probably the wrong takeaway. So below are some headlines that I have attempted to correct for you!

Mazur: Definitely NOT business as usual

The Court of Appeal restored, in part, what most of us had assumed to be the position before last September's disruption: paralegals, CILEx lawyers and barristers without full litigation rights, trainee solicitors, litigation executives can carry out essentially any individual task in litigation work. However, that reassurance came with a huge caveat that many people seem to have missed: this will only be possible if someone with litigation rights (such as a solicitor) retains overall conduct of the matter and puts in place appropriate arrangements for supervision and delegation. Meaningful oversight by someone with the right to conduct litigation is not optional, it is the foundation the whole judgment rests on.

So, can a Cilex lawyer or barrister without the additional rights manage a litigated matter day to day if supervised? Probably, yes. Can they get a promotion to manage and supervise the work of other individuals without litigation rights? Probably not, no. For CILEx lawyers, paralegals and litigation executives, the temptation is to again view full practice rights as a nice-to-have but that seems to be dangerous. Resist it if you are interested in true career progression.

SRA guidance on Mazur – which will no doubt include a laundry list of expectations for the required delegation and supervision - is still awaited.

Dentons: AML Allegations Remitted Back to the Disciplinary Tribunal

Similarly, in Dentons v SRA the Court of Appeal gave very welcome confirmation that the SRA’s attempts to argue strict liability for any and all breaches was a step too far. But this was a very broad stance on legal breaches generally, which included an interesting discussion on how serious a law firm’s failure to have the right fire extinguisher set up might be treated by the Solicitors Disciplinary Tribunal! It doesn’t necessarily say a lot about Money Laundering Regulations breaches. In fact, some of the original allegations in the case have simply been sent back to a fresh Solicitors Disciplinary Tribunal panel for a new decision, along with some comments about the facts of the case which should be of concern to Dentons. So it remains to be seen exactly what the outcome will be for some of the alleged breaches of the AML requirements. I’m afraid that this case is far from over. In the meantime, the takeaway is definitely not that AML compliance matters less than we thought. Only that every case should be looked at on its facts – which is just common sense, right?  

AML Regulations: Amendments (Finally…) Coming

The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 were laid before Parliament in March of this year, with implementation expected imminently. Watch this space. The key changes: high-risk third countries narrowed to FATF's black list only (grey list connections no longer automatically trigger mandatory EDD, though your own risk assessment still applies); pooled client accounts decoupled from simplified due diligence (brace for your bank asking for more information in higher risk matters); and digital identity verification given formal standing via the DVS Register.

SRA Annual AML Data Collection: mandatory for all!

Nothing quite says ‘summer’ like being locked indoors, scrambling around for data to answer the SRA’s latest anti-money laundering and sanctions mandatory questionnaire, am I right? All firms must respond, even if it is a “nil return” because the firm is not doing any relevant work – though take care here because sanctions expands scope well beyond the Money Laundering Regulations. You can find more information than you ever wanted to know on this topic, including a sample questionnaire in PDF, on the SRA website. The forms will go live on 29 June 2026, with a deadline not yet having been published on the website. Don’t ignore this. The SRA recently took disciplinary action against some firms who failed to reply to the questionnaire last year so make sure that it’s on your radar.

Can we fire the client? Helpful new SRA guidance

I get asked this question more often than you might imagine. But it’s genuinely difficult to answer. Historically the common law has never permitted lawyers to simply terminate their agreement with the client the way that other businesses can, and with good reason to be fair. Clients should not be left stranded and alone in the middle of a Court process without help. But as the role of lawyers has evolved, those rules have become more challenging to apply.

The SRA has now published new guidance on terminating the client retainer and it is genuinely useful.

The starting point is that once a retainer has been accepted, you cannot walk away because a matter has become difficult, unprofitable or uncomfortable. You need a good reason and must give reasonable notice. What the guidance makes clear is that AML concerns can constitute that good reason. Where completing CDD becomes impossible, or where continuing to act would require you to breach your professional obligations, you are entitled to end the retainer. It’s great to have that clarity in a simple accessible format on the SRA website without having to bury your head in legal texts.

Two points that still regularly trip firms up re: AML retainer termination…

First, communication. If AML concerns are the reason - particularly where a Suspicious Activity Report is in contemplation or has been made - you cannot tell the client why. Tipping off remains a criminal offence under POCA 2002 regardless of whether you are continuing to act. You are entitled to say that owing to professional obligations you are unable to continue acting and unable to discuss the matter further. That may not feel very satisfying for all concerned but it is all that you can say legally sometimes. You cannot lie but neither can you be honest! It’s a really difficult spot to be in unfortunately.

Second, and this still catches firms out more than it perhaps should, ending the retainer does not end the obligation to report. If you have grounds for a suspicious activity report (SAR), terminating the relationship does not extinguish that obligation. You should still make the report via your MLRO in the usual way.

AML Procedures must record YOUR practice – not simply best practice

I often get asked to help make sure that a firm’s AML procedures are in good shape, and by this point I know very well what the SRA are looking for. But the truth is that perfect policies procedures can be a liability if they don’t reflect what you’re actually doing. This has become a real bug bear for the regulator and they tend to view it as evidence that people have not done the job properly.  

The SRA's AML Controls webinar in March set out some figures that are worth sitting with. Over 80% of firms referred for investigation had client and matter risk assessment paperwork in place but staff didn’t seem to know! What a waste of beautifully crafted Client and Matter Risk Assessments, I hear you cry? I feel your pain.

The SRA’s recent enforcement action paints a similar picture so make sure that if you say you do it that you are actually doing it.

Top tip: in the world of AI (with appropriate safeguards in place and following your firm’s policies of course!), why not ask your favourite tool to produce a checklist based on your procedures so you can go through and make sure that you’re doing everything you’re supposed to?

AI and the Complaints Surge

The Law Society has issued a warning that regulatory expectations for complaints handling may need to change with the advent of AI. There is increasingly credible evidence that detailed and not always entirely accurate client complaints written by AI are significantly increasing in the burden on law firms. Regulatory expectations have not changed: robust first-tier handling is still the requirement. I cannot help but wonder – as with much of the AI debate – whether ultimate answer to an AI based problem will become an AI based solution? Would love to know what you think.

Quickfire Roundup

• OFSI General Licence for Legal Services – new licence in force from 29 April 2026.
• HMRC Tax Adviser Registration – the new requirement to register with HMRC comes into force on 18 May 2026, with a three-month grace period for registration. Covers SDLT returns and other HMRC interaction on behalf of clients. Remember that this is distinct and separate from any need to register with the SRA if you come under a different definition of tax adviser for the purposes of the Money Laundering Regulations.
• PSC Statutory Guidance — new guidance on significant influence or control published 4 March 2026.
• MLRO/MLCO intelligence alerts — if you are an MLRO or MLCO, the SRA is sending non-public NCA-sourced alerts directly to your mySRA account. If you have not come across these, check your mySRA contact details are current. You will not receive them if your registered details are out of date.

About the author

This update has been prepared in collaboration with Andy Donovan of Attuned Consulting.

Andy has spent more than two decades at the heart of legal regulation - as a practising lawyer, senior figure at the SRA, and founder and former CEO of The Compliance Office, which he grew into a multi-million-pound advisory business working with hundreds of law firms from the biggest practices in the world to specialist boutiques.

He now works through Attuned Consulting, supporting law firms, lawyers and investors on AML, SRA compliance, regulatory structuring and high-stakes regulatory problems.