Anti-Money Laundering (AML) Guidance Update - April 2025
Published
Harriet Holmes
AML Services Manager
The Legal Sector Affinity Group, comprising regulatory and representative bodies for legal services in the UK, produces guidance on anti-money laundering and terrorist financing regulations.
The latest revision of the LSAG Guidance, effective from 23 April 2025, incorporates the December 2023 addendum and has received HM Treasury's approval.
What is the purpose of the guidance?
The guidance aims to help legal professionals and firms maintain compliance with the Money Laundering Regulations 2017 (as amended).
The guidance provides practical recommendations and examples to assist legal professionals in identifying, assessing, and mitigating money laundering and terrorist financing risks effectively. It outlines best practices, but also expectations for customer due diligence, record-keeping, and suspicious activity reporting.
Who is this update relevant to?
LSAG comprises regulatory and representative bodies from the UK legal sector. If you are supervised by one of the organisations listed below, this guidance is relevant to you and constitutes official AML guidance.
The Law Society of England and Wales
Bar Standards Board
Chartered Institute of Legal Executives
Council for Licensed Conveyancers
Faculty of Advocates
Faculty Office of the Archbishop of Canterbury
General Council of the Bar
General Council of the Bar of Northern Ireland
Law Society of Northern Ireland
Law Society of Scotland
Society of Scrivener Notaries
Solicitors Regulation Authority
What has been updated or amended?
For reference purposes, the guidance includes a comprehensive schedule of amendments on page 221. Please find a summary of these amendments below.
| Paragraph | Amendment |
|---|---|
| 4.2.2, 6.16.2, 16.18.1 & 16.18.2 | Updated ownership threshold terminology - Changed “25% or more” to “more than 25%” |
| 4.7 | Added ECL registration requirement for firms with turnover over £10.2M |
| 5.1.1 | Added guidance on supply chain risk assessment |
| 5.6.2.1 & 6.19.1 | Updated HRTC definition based on FATF lists |
| 6.14.1 | Clarified ECCTA does not impact regulation 28(9) |
| 6.14.4 | Wording clarification on verification document requirements |
| 6.14.10 | Updated guidance on ownership structure verification |
| 6.14.11.4 | Added a new subsection on the register of overseas entities |
| 6.17.2.1 | Revised source of funds guidance for third-party contributions |
| 6.19.3.1-3 | Added new domestic PEP risk assessment guidance |
| 12.6 | Added discrepancy reporting links |
| 13.4.3 | Removed footnote |
| 16.4 | Added new ECCTA defences |
| 16.4.4 | Added de minimis exemption guidance from ECCTA |
| 16.4.5 | Added mixed-property transactions guidance from ECCTA |
| 16.7.4 | Added jurisdictional issues guidance |
What Should Law Firms Do?
Top Tip: Make sure to thoroughly document all AML-related decisions, reviews, and updates. Keep a clear record of amendments and updates within your AML Policy. Version control helps demonstrate when changes were made and who made them to anyone reviewing the documentation and who approved them where needed.
Read and understand the new guidance thoroughly, familiarise yourself with the changes, and assess their impact
Share the changes with relevant stakeholders
Update your Firm-wide Risk Assessment to document that you have reviewed and considered any impact and necessary changes
Review and update your AML policies and procedures as needed, pay close attention to wording and communicate any policy and procedure changes to all staff members
Set up regular review meetings to monitor implementation progress and address any challenges
Provide AML training to cover any changes
Consider engaging external AML consultants or specialists for additional guidance on complex areas of the new requirements
Glossary terms
AML - Anti-Money Laundering
ECL - Economic Crime Levy
HRTC - High Risk Third Country
ECCTA - The Economic Crime and Corporate Transparency Act 2023
PEP - Politically Exposed Person
LSAG - Legal Sector Affinity Group FWRA - Firm-Wide Risk Assessment
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