The SRA’s recent thematic review of AML training has set the tone for a new era in compliance. While the findings provide valuable insights, they also pose challenges for law firms trying to keep pace with ever-evolving expectations. For busy lawyers, understanding what the SRA now expects—and how to navigate these demands—is crucial.
This post unpacks the key takeaways from our recent webinar on the SRA’s thematic review and offers practical suggestions to help firms adapt.
Why the thematic review is an important piece of work
The SRA conducted the thematic review in response to ongoing concerns about firms’ compliance with the Money Laundering Regulations. With around half of the firms inspected found to be non-compliant in some way, the regulator aimed to clarify its expectations for AML training, focusing on what constitutes effective practice to improve standards across the profession.
Let’s face it, we have all sat through the same AML presentation many times. It is often largely irrelevant to our actual practice and rarely is it particularly engaging, tending to focus on the legislation rather than the practical implications. So, skepticism to one side for a moment, the SRA is definitely onto something with this review.
Lawyers need to take notice. The thematic review is more than just any old guidance document—it sets clear expectations that will shape the future of AML compliance. Firms should treat it as a clear indication of what the regulator will look for during AML inspections, and possibly as the foundation for future enforcement activity. Unless the profession pulls its collective socks up, further guidance and Warning Notices on this topic should be expected.
One key takeaway is that while the review is positioned as guidance, it feels much more like a rule. As a minimum, firms are now expected to produce a formal AML Training Programme document that outlines their approach to training and demonstrates compliance with the Money Laundering Regulations. Additionally, firms must maintain detailed records of all AML training, including informal sessions, to ensure they can evidence their efforts.
The SRA has also provided a checklist to help firms assess whether their training meets the new standards. Completing this checklist isn’t just a useful exercise—it’s likely to be a key feature of future inspections. Firms that can show they’ve followed the checklist and integrated the review’s requirements into their training plans will be better placed to satisfy the regulator. Take note of the questions on the checklist where you are asked to justify a “no” answer: the implication is, if you are saying your proposed training doesn’t do something, you should be thinking about how it can do that.
By setting these expectations, the thematic review raises the bar for AML training across the legal sector. It challenges firms to go beyond generic approaches and embrace tailored, ongoing, and well-documented training programmes.
From generic to tailored: The new standard
The headline message from the SRA is clear: generic, off-the-shelf AML training on its own is no longer enough.
Firms must now deliver tailored training that directly addresses their specific risks, client base, and practice areas. For example:
- A property-focused practice should concentrate on the risks of money laundering in real estate transactions.
- Private client teams might explore vulnerabilities in inheritance or trusts.
- Firms with broad practice areas may need to deliver AML training differently between departments.
This shift towards tailoring is a significant step forward in making AML compliance meaningful and effective. However, it’s not without its difficulties:
- Resource challenges: Smaller firms may lack the expertise, staff, or budget to develop bespoke training programmes.
- Scalability: Larger firms with diverse practice areas will find it challenging to address the unique risks of every department.
While the SRA is right to push for more bespoke solutions, generic training still holds value—particularly for smaller firms, those newly regulated, or for new joiners. It can provide a solid foundation, ensuring that everyone in the firm understands basic AML principles. The key is to enhance this foundation with tailored examples and specific, practical scenarios.
Is the SRA’s approach practical?
The thematic review is welcome as a step forward, offering clear guidance on what “good” AML training looks like (from the regulator’s perspective, that is). However, it could be criticised for being overly prescriptive.
Remember when the SRA was adamant that broad principles and outcomes were more important than black-and-white rules? It wasn’t that long ago. Well, this thematic review is almost the opposite to that approach.
Many will feel the SRA risks setting the bar so high that compliance becomes unattainable without significant investment. There is certainly a disconnect between the regulator’s demands and the operational realities faced by firms, particularly smaller ones. Tailored training, while ideal, requires investment, time, expertise, and resources that not all firms have readily available.
A punitive mindset?
The SRA’s reputation for focusing on enforcement rather than support loomed large in our webinar discussions – “This feels like another example of the SRA handing out knuckle-raps.”. There’s a perception that the regulator’s approach is more about catching firms out than helping them succeed.
With significant fines (over 1% of turnover) now being slapped on unlucky firms who don’t keep old versions of AML documents, the SRA has set its AML compliance stall as being more stick than carrot.
Beyond AML: Implications for continuing competence
The thematic review could be a test case for broader regulatory changes. With continuing competence already under scrutiny, it’s not unlikely that the principles outlined here could be applied across the board, leading to:
- Increased administrative burdens: The expectation to tailor training and keep detailed records might extend to all areas of professional development.
- Over-regulation: Some worry this could stifle innovation and make compliance feel even more like a bureaucratic exercise.
While a sharper focus on competence has to be a good thing, any future reforms have to be proportionate and practical. Otherwise they penalise smaller firms.
Real-world relevance: Making AML training matter
One of the most significant takeaways from the review is the emphasis on real-world examples. The SRA says that AML training needs to go beyond theoretical knowledge. Lawyers must be equipped to spot red flags and apply what they’ve learned to their day-to-day work.
What does this look like in practice?
- Firm-specific scenarios: Use examples of near misses, suspicious transactions, or actual cases that have arisen in your firm to make training relatable.
- Practical application: Instead of memorising the Proceeds of Crime Act, staff should understand how risks manifest in their roles and how to respond effectively.
The focus is on embedding AML awareness into the firm’s culture, making it a practical, everyday consideration rather than a compliance checkbox.
Informal training: A new challenge (and opportunity) for documentation
The SRA expects firms to document all forms of AML training, including informal sessions like:
- Quick team chats about regulatory updates.
- Briefings during team meetings.
- Updates via email e.g. on changes to FATF lists or media articles about SRA enforcement activity.
For many firms, this poses a practical challenge. How do you systematically record and store information from impromptu training moments? While the expectation to document everything makes sense in theory, the reality of implementing such systems is daunting.
However, if you can capture these “moments”, your portfolio of AML training will quickly start to look much more impressive. As well as all the plans, slides and training logs you will also be able to point towards less formal training opportunities being seized.
The role of leadership: Spotlight on the MLCO
The thematic review has arguably brought renewed attention to the role of the Money Laundering Compliance Officer (MLCO). While the MLRO (Money Laundering Reporting Officer) often takes centre stage, the MLCO has broader responsibilities for overseeing the firm’s entire AML framework.
Yet hitherto, the MLCO has often played a secondary role.
Interestingly, the review found that firms where MLCOs received specific training tended to perform better in compliance audits. However, it’s not entirely clear whether this is causation or correlation: does specific MLCO training directly improve compliance, or does it simply reflect a broader cultural commitment to AML within the firm?
Either way, the message is clear: the SRA expects firms to invest in the development of their compliance officers. That means seeking out specific training opportunities for MLCOs and MLROs. The MLCO may also need to become more involved in the firm’s learning and development programme.
The challenge ahead: Balancing practicality and compliance
The SRA’s thematic review is a wake-up call for firms to rethink their approach to AML training. While the shift towards tailored, practical, and ongoing training is essential, it also demands significant effort and resources.
For lawyers, the takeaway is this: AML compliance is about avoiding penalties, whereas AML effectiveness is about embedding a culture of vigilance and accountability across your firm. Whether you’re a small practice or a large corporate firm, the focus should be on making compliance practical, meaningful, and effective.
As the regulatory landscape evolves, firms must evolve with it—but the SRA must also play its part by offering the support and tools firms need to succeed.
Want to learn more?
This blog captures insights from the webinar “Seismic Shifts in AML Training Expectations.”
Please subscribe to the COLP Insider newsletter to receive invitations to future webinars. They are free resources.
Have thoughts or questions? Get in touch—we’d love to hear from you.
