On 8 May 2025, the Solicitors Regulation Authority (SRA) published its 2025/26 Business Plan, setting out its strategic priorities for the final year of its current Corporate Strategy (2023–2026). Against a backdrop of rising regulatory risks, increasing misconduct investigations, and evolving threats in the legal sector, the SRA is sharpening its focus on anti-money laundering (AML), professional ethics, and client protection.
For small law firms and sole practitioners , this plan is more than a policy document—it’s a clear signal of what the regulator expects in terms of compliance, conduct, and risk management. This blog post explores the key AML and ethical priorities in the SRA’s 2025/26 Business Plan and outlines practical steps firms can take to stay compliant and resilient.
Key AML and Compliance Priorities in the 2025/26 Plan
1. Accelerating Data-Driven Risk Detection
The SRA is investing heavily in data and intelligence capabilities to identify AML risks earlier and respond more effectively. This includes:
- Advanced analytics to detect suspicious patterns in client transactions and firm behaviour.
- Faster triage of misconduct reports, enabling quicker regulatory intervention.
- Proactive monitoring of high-risk firms, including those with poor AML histories or weak internal controls.
For small firms, this means the SRA is more likely to spot issues before they escalate. Firms must ensure their AML systems are not only compliant but also transparent and auditable.
Action point: Review your AML processes and ensure they are supported by clear documentation. Consider using digital tools to track client due diligence and flag anomalies.
2. Responding to Complex and High-Volume Cases
The SRA reports a 40% increase in misconduct investigations, many involving large firms and complex structures. However, small firms are not immune—especially those operating in:
- High-volume consumer claims, where AML risks can be obscured by scale.
- Client money handling, a known vulnerability for financial crime.
- Cross-border transactions, which may involve high-risk jurisdictions or opaque ownership structures.
The regulator is prioritising AML compliance in these areas, and small firms must be prepared for more rigorous scrutiny.
Action point: Conduct a fresh Practice-Wide Risk Assessment (PWRA) that reflects the complexity of your work and the latest AML guidance. Pay special attention to client money flows and international matters.
3. Reforms to Protect Client Money
Protecting client funds is a cornerstone of AML compliance. The SRA is launching a dedicated programme to strengthen safeguards around client money, including:
- A review of pooled client account practices, which can obscure the source and destination of funds.
- Enhancements to transparency and auditability, ensuring firms can trace every transaction.
For sole practitioners and small firms, this means tighter expectations around how client money is held, recorded, and reconciled.
Action point: Audit your client account procedures. Ensure you have clear records, regular reconciliations, and robust controls to prevent misuse or error.
4. Emphasis on Professional Ethics
The SRA is reinforcing the importance of ethical conduct, particularly in relation to AML obligations. Firms are expected to:
- Embed ethical decision-making into compliance frameworks, ensuring that staff understand not just the rules, but the principles behind them.
- Train staff on ethical risks linked to financial crime, including conflicts of interest, client confidentiality, and reporting obligations.
Ethics and AML are increasingly intertwined. A failure to act ethically—such as ignoring red flags or failing to report suspicious activity—can now lead to serious regulatory consequences.
Action point: Update your training programme to include ethical scenarios related to AML. Encourage staff to speak up about concerns and document their decisions.
5. Budget and Fee Adjustments to Support AML Oversight
To fund its expanded programme, the SRA proposes a £16.3 million budget increase, supported by a modest rise in practising certificate fees. This investment will enable:
- More robust AML supervision, including targeted audits and thematic reviews.
- Faster enforcement action, reducing delays in addressing misconduct.
- Continued efficiency improvements, allowing the SRA to respond to risks more dynamically.
While the fee increase may be modest, it reflects the regulator’s commitment to intensifying AML oversight—and firms should expect more engagement from the SRA in the year ahead.
Action point: Factor the fee increase into your budget and prepare for potential contact from the SRA regarding your AML systems or risk profile.
Implications for Solicitors and Compliance Officers
Proactive Supervision
The SRA’s shift toward data-driven, proactive supervision means firms must be ready for early intervention. Waiting until an issue arises is no longer acceptable.
Tip: Monitor your firm’s risk indicators—such as unusual client behaviour or transaction patterns—and act before the regulator does.
AML Policy Review
Your AML policies must reflect the current risk landscape, including updates from the LSAG April 2025 guidance and the SRA’s enforcement strategy.
Tip: Remove outdated references and include new definitions (e.g. beneficial ownership thresholds, high-risk third countries).
Client Money Reforms
Changes to client money handling rules are likely. Firms should prepare by reviewing their current practices and identifying areas for improvement.
Tip: Consider separating client accounts where possible and ensure all transactions are traceable and justified.
Ethical Culture
The SRA expects firms to embed ethics into their culture, not just their compliance manuals. This is especially important for sole practitioners , who may not have a formal compliance team.
Tip: Use real-world examples in training and encourage open discussion about ethical dilemmas.
Next Steps for Small Firms and Sole practitioners
- Read the Full Business Plan
Visit the SRA website to access the full 2025/26 Business Plan and understand the regulator’s priorities in detail. - Conduct an Internal AML Risk Assessment
Align your assessment with the SRA’s focus areas, including client money, high-risk transactions, and ethical conduct. - Update Your AML and Ethics Training
Ensure all staff receive training that reflects the latest guidance and regulatory expectations. - Prepare for Consultation Feedback
The SRA is inviting feedback on its business plan. Consider submitting your views, especially if you’re concerned about the impact on small firms.
Final Thoughts
The SRA’s 2025/26 Business Plan is a clear call to action for the legal profession. For small law firms and sole practitioners , the message is simple: AML and ethics are no longer optional—they are central to regulatory compliance and professional integrity.
By taking proactive steps now—updating policies, training staff, and reviewing client money procedures—firms can not only meet the SRA’s expectations but also build a stronger, more resilient practice.