What the LSB’s damning report means for the future of the SRA…and the solicitors it regulates
Is the SRA facing a reckoning? The LSB’s latest performance report delivers a damning verdict on the regulator’s handling of major scandals like Axiom Ince and SSB Group – just as both the Chair and Chief Executive prepare to step down. Will new leadership bring reform, a crackdown, or more of the same? Our latest blog explores what this all means for the profession, and what to expect next.
AI in your law firm: Stop talking, start doing
Many law firms are still hesitating on AI adoption, but the time for deliberation is over, says Sophie Cisler.
This blog post outlines practical steps for integrating AI into your practice, emphasising the importance of moving beyond discussions to implementation. It highlights how AI can enhance efficiency, reduce costs, and improve client service, while also addressing the risks of inaction. For firms ready to embrace innovation, this is a must-read guide to starting your AI journey.
Checklist: the building blocks of AML compliance
Is your firm missing a vital AML building block?
In this must-read blog, we share a practical checklist to help law firms get AML compliance right – from risk assessments and training to independent audits and policies that actually work. Whether you’re refining your framework or starting from scratch, this is essential reading for MLROs, COLPs, and compliance teams.
ICYMI: There but for the grace of God go I… what every Compliance Officer secretly fears
This blog reflects on the growing pressure facing compliance officers, particularly as the SRA ramps up fines and prosecutions – even for historic breaches. It explores the reputational fallout that can hit COLPs, COFAs and MLROs when things go wrong, often unfairly.
While LinkedIn can be a useful space to share insights and stay up to date, the blog also calls out the unhelpful trend of using compliance failures to push products or score cheap points. Most importantly, it’s a reminder that compliance officers need support, resources, and community – because this could happen to any of us.
ICYMI: The SRA’s AML crackdown continues: Lessons from the latest £25k fine
The SRA has fined a firm £25,000 for failing to carry out proper source of funds and wealth checks on a high-risk client. The breaches were historic – but if they’d happened today, the fine could’ve been much higher under the SRA’s new unlimited fining powers.
This post breaks down the decision, what went wrong, and why SOF/SOW checks are under the spotlight like never before.
ICYMI: TPMA webinar summary
On 26 March, we hosted a webinar on Third-Party Managed Accounts (TPMAs), exploring their benefits, risks, and practical considerations for solicitors. Thank you to Daniel Dunne of Interpolitan Money for his expert insight – it’s worth connecting with him on LinkedIn for future updates.
The discussion highlighted how TPMAs, essentially client accounts outsourced to regulated third-party providers, offer secure handling of client funds, potentially reducing compliance burdens and administrative tasks.
While the SRA consultation on solicitors’ ability to hold client money remains ongoing, firms were encouraged to proactively consider TPMAs strategically within their business planning, despite no immediate mandate expected from the SRA.
Practical points covered included due diligence when choosing a TPMA provider, assessing cybersecurity measures, service efficiency, and the potential impact on client interest and firm revenues.
To watch the full webinar recording (available free for 30 days), click here (passcode: Pna?3+nC).
If you want to learn more about TPMAs, consider registering for Gemstone Legal’s TPMA 101 session.
News and Guidance
- SRA | Reporting your firm’s diversity data – Get ready for the next diversity monitoring exercise, coming this summer. The SRA mandates that all regulated law firms, irrespective of size, must collect, report, and publish workforce diversity data every two years.
- All SRA-regulated firms, including sole practitioners and small firms, are required to participate. In-house legal teams are exempt.
- Firms must gather anonymised data from all staff members, covering aspects such as role, age, sex, gender identity, ethnicity, disability, religion, sexual orientation, education, and caring responsibilities. Participation is voluntary, with a ‘prefer not to say’ option available for each question.
- Firms are obligated to publish a summary of their diversity data, provided it does not risk identifying individuals. If anonymity cannot be ensured, firms are not required to publish the data but must inform the SRA of the reasons.
- Non-compliance with these requirements may result in regulatory action, including fixed penalties.
- Firms must handle all collected data in accordance with data protection laws, ensuring transparency about data usage and access.
- OFSI | Legal Services Threat Assessment – The Office of Financial Sanctions Implementation (OFSI) has released a threat assessment focused on the legal sector’s exposure to sanctions risks – particularly in the context of Russia-related measures. The report found that legal services providers (mainly solicitors and barristers) submitted 16% of suspected sanctions breach reports since February 2022 – second only to financial services. OFSI sees legal professionals as critical gatekeepers. It has concerns that there is some under-reporting in the sector, and that there have been breaches of licence conditions.
- Legal Futures | SRA: Claims firms “destabilised” by litigation funding deals – The SRA has warned that some high-volume consumer claims firms are being destabilised by litigation funding arrangements, particularly in the housing disrepair space. Early conclusions from its thematic review into the market found evidence of:
- Insolvency risk: At least one firm collapsed due to a business model reliant on third-party funding.
- Poor incentives: Funding deals may be prioritised over client interests, with clients sometimes signing agreements directly with funders.
- Dodgy relationships: Inappropriate ties between funders, ATE providers, and experts – often with overlapping personnel.
- Onboarding failures: Cold calling, misleading marketing, poor due diligence, and failure to explain alternative funding options.
- Institute of Business Ethics | Taskforce on Business Ethics and the Legal Profession – The IBE’s legal task force has released a report (“A review of client acceptance by Solicitors in England & Wales in relation to Kleptocracy, State Capture and Grand Corruption“) urging law firms to adopt a new ethical decision-making framework for client intake, aiming to prevent the facilitation of kleptocracy and restore public trust in the legal profession. Recommendations include:
- Six-Step Client Intake Framework: Implement a structured process for evaluating potential clients, emphasising ethical considerations beyond existing AML regulations.
- Legitimate Provenance of Wealth Test: Require credible explanations for the origin of clients’ wealth to ensure transparency and accountability.
- Responsible Leadership: Encourage law firm leaders to prioritise public interest and uphold the profession’s duty to society.
- LSB | Regulatory Performance Assessment March 2025 – The Legal Services Board (LSB) has issued a highly critical performance assessment of the SRA, highlighting significant shortcomings in its regulatory functions. The report identifies failures in the SRA’s authorisation, supervision, and enforcement processes, particularly in the wake of the Axiom Ince collapse, where over £60 million in client funds were lost, and SSB scandal. The LSB also criticises the SRA for not publishing pass-rate data for SQE providers, hindering transparency for prospective solicitors. Additionally, concerns were raised about the SRA’s internal governance, noting delays in informing its board about critical issues, such as the Axiom Ince intervention.
- Law Society | Practice note: Implementing whistleblowing arrangements – This practice note provides guidance for firms on establishing effective whistleblowing policies and procedures. It outlines law firms’ regulatory obligations to encourage and handle concerns, details the process for reporting to the SRA, and discusses the impact of whistleblowing legislation on legal practices. The note also offers practical considerations for developing a supportive environment that enables staff to raise issues confidently and ensures compliance with professional standards.
- Law Society | Ethics feature: Using a colleague’s e-signature: solicitor suspended after sick-leave incident – A recent case involved a solicitor who, during a colleague’s sick leave, affixed the absent colleague’s e-signature to legal documents without authorization. This led to a suspension by the SDT, underscoring that even well-intentioned actions can breach professional conduct rules.
- Law Society | Guide: Suspicious activity reports – This guide explains how to identify, prepare, and submit Suspicious Activity Reports (SARs) to the National Crime Agency (NCA), including when to seek a Defence Against Money Laundering (DAML).
- When to report: In the regulated sector, you must make a SAR if you know, suspect, or have reasonable grounds to suspect money laundering. Suspicion must be more than a vague unease but can be based on a relatively low threshold.
- Forming a suspicion: You don’t need extensive investigations. Suspicion can arise from inconsistencies, warning signs, or known criminal conduct. You must have reason to believe criminal property exists.
- How to submit: Use the NCA’s SAR portal. Include identity details, relevant glossary codes, and a clear explanation of the reason for suspicion. Avoid legal jargon, attachments, and privileged material unless permitted.
- DAML requests: Required when you suspect dealing with criminal property may involve a principal offence. Be explicit in your SAR about the act, parties, and suspected property. A 7-day notice period starts when you file; if refused, a 31-day moratorium applies.
- Legal Professional Privilege: Don’t submit a SAR if the information is privileged, unless the crime/fraud exception applies.
- Failure to disclose: Not making a SAR when required may lead to prosecution, even if the underlying money laundering is not proven.
- Impact: Although SARs from legal professionals make up a small fraction of total reports, they have led to significant criminal funds being denied – over £270 million in the last reporting period.
Compliance corner – real life Q&As
Q: Do I still need to do source of funds checks if the money is coming from a well-known UK bank?
Yes. Assuming it’s “safe” because the funds are from a high street bank is a common misunderstanding. The fact that money originates from a regulated institution does not satisfy your obligation under the Money Laundering Regulations.
The source of funds check isn’t just about where the money is sitting, it’s about understanding how your client came to have the money they’re using. That might involve asking for bank statements, evidence of inheritance, property sale details, salary slips, or other documentation that shows the origin of the funds.
We often hear lawyers say things like “yes, but the bank will have done its own AML checks”. Which is true – probably – but the law puts a direct responsibility on the legal professional too.
The SRA has made it clear that relying solely on the reputation of a bank is not enough. You are expected to assess whether the transaction makes sense in the context of your knowledge of the client and their risk profile. And you must document that assessment.
Don’t confuse source of funds with source of the transfer. Even if it’s a well-known bank, you still need to understand the story behind the money.
This is not legal advice. If you have a question you would like us to answer in this section, feel free to send it to info@jonathonbray.com
Free CPD
Next live session: Wellbeing in the law – registration now open
Date: Wednesday, April 30th
Time: 12:00pm
Platform: Zoom
Join us for a special lunchtime webinar exploring wellbeing in the legal profession, featuring expert guests from LawCare, The Law Society, and The Solicitors’ Charity.
We’ll discuss the real challenges lawyers face, practical support available, and how firms can foster healthier, more sustainable working environments.
Open to all – free to attend.
Recording: TPMAs – what you need to know
With potential regulatory change on the horizon, following the now-closed SRA consultation on managing client money, law firms are increasingly asking about third-party managed accounts (TPMAs). Are they the right solution? What are the risks? How do they compare to traditional client accounts?
To answer these questions, we hosted a free webinar with Daniel Dunne from Interpolitan Money, who shared expert insights.
We covered:
- The benefits and risks of TPMAs
- How TPMAs work in practice
- The impact of potential SRA changes
- Practical considerations for law firms (including what needs to be communicated to the SRA)
Watch the recording (passcode Pna?3+nC) – available for 14 days.
SRA and SDT disciplinary decisions
- Imtiaz Ali Ameen – solicitor fined £5,787 for accepting a £25,000 loan from a client, without advising the client to take independent legal advice.
- Alistair Ward Davies – non-lawyer employee banned from the profession for failing to disclose a caution to his employers.
- Claire Sadler – legal executive barred for fabricating correspondence and witness statements.
- Terence Lock – non-lawyer caseworker removed from the profession following a tax evasion conviction.
- James Prusram Ramdhun – COLP fined almost £8,000 for breaching a client account undertaking and then compounding the issue by loaning his client nearly £39,000 through his private company to replace the funds at 8% interest, creating an own-interest conflict.
- Paula Gray – Head of Accounts removed from the profession following theft conviction.
- Idiculla Solicitors – AML fine for sole practitioner of £5,375.
- Barton Law Ltd – AML fine of £12,588.
- Kash Tutter & Co – sole practitioner hit with £3,303 AML fine.
- Alan Turner & Co – another sole practitioner hit with AML fine (£3,848).
- Rollits LLP – £15,168 AML fine for source of funds breaches.
- Jerome & Co Solicitors Limited – £12,194 AML fine for historic breaches dating back to 2011.
- AJD Law Limited – AML investigation (prompted “following a report from a third party“) results in fine of £17,920. A new way for disgruntled employees to stick the boot in…?
Friendly reminder: Staying on the roll
If you’re a non-practising solicitor and want to remain on the roll, you must actively apply via mySRA – it’s not automatic. The SRA’s annual process requires you to confirm your status and pay a £20 fee. Failure to apply means removal from the roll, so if you wish to keep your status, make sure to complete the process before the deadline. The application window is 3 April to 28 May 2025. For full details and to apply, visit the SRA website.
Training your team: Anti-money laundering
The SRA expects that all ‘relevant employees’ practicing within the scope of the Money Laundering Regulations (MLRs) must receive robust anti-money laundering (AML) training. Now is the time to ensure your firm is compliant. Failure to meet these obligations can result in significant fines and regulatory action.
Our comprehensive AML training is designed to equip your team with the knowledge and practical skills needed to identify, prevent, and report suspicious activities, safeguarding your firm from risk. Ensure your firm stays ahead of regulatory requirements and avoids potential pitfalls by enrolling your team today.
Formats available: Online | In person | On-demand
Don’t miss out—request a free quote today!
Safeguard your practice: Independent AML Audit
What we do – contact us for further information about our services
- Outsourced COLP and COFA support
- Compliance audits
- New firm and ABS applications
- Independent AML audits (Regulation 21)
- Training (online, remote, on demand)
- AML and GDPR workshops
- PII cost reduction
- Remote file reviews
- TPMAs
- Escrow accounts
- AML and sanctions searches
