The Law Society of England and Wales has raised strong concerns regarding the UK Government’s proposed amendments to the Money Laundering, Terrorist Financing (Amendment and Miscellaneous Provision) Regulations 2025. The draft regulations would require solicitors to conduct full customer due diligence on all clients whose funds are held in pooled client accounts—bank accounts where a law firm holds funds on behalf of multiple clients at once. Under the current regime, firms may apply Simplified Due Diligence (SDD) in low-risk situations, consistent with a risk-based approach to anti-money laundering (AML) compliance.
The Law Society argues that removing the option of SDD will impose disproportionate administrative and financial burdens on law firms, particularly small and medium-sized practices. Full due diligence on every client, irrespective of the assessed risk level, would create delays, increase costs, and potentially restrict public access to legal services. The Society stresses that pooled accounts are already regulated and subject to strict controls, including client identification and ongoing monitoring aligned with risk level. Diverting compliance resources toward low-risk clients, they caution, would weaken AML defences by limiting the profession’s ability to focus on genuinely high-risk transactions.
Law Society President Richard Atkinson criticises the blanket nature of the proposed obligations as inconsistent with established policy principles and lacking evidence of systemic AML failures involving pooled accounts. He urges HM Treasury to reconsider and engage further with legal sector stakeholders to ensure a proportionate regulatory outcome. According to the Law Society, effective AML oversight should be risk-driven, targeted, and operationally workable—preserving both financial system integrity and public access to legal services.