UK Solicitors Face Sharper Source-of-Funds Expectations as SRA Updates AML Risk Assessment

The Solicitors Regulation Authority has sharpened its expectations around source-of-funds and source-of-wealth checks in its updated sectoral risk assessment for anti-money laundering, terrorist financing, proliferation financing and sanctions, published on 6 August 2026.

The SRA describes source of funds and source of wealth as central considerations when assessing whether a transaction presents elevated money-laundering risk. Its updated assessment states that an understanding of the funds and wealth used in transactions is a key control across several high-risk areas, particularly property transactions, complex ownership structures, offshore arrangements and matters involving politically exposed persons or higher-risk jurisdictions.

The regulator also makes clear that money passing through a UK bank account does not by itself establish legitimacy. Firms are expected to understand the underlying origin of the funds, especially where money comes from third parties, cash, pooled funding, intermediary jurisdictions or structures that reduce transparency over ownership and control.

Property remains a particular concern. The SRA says cash purchases of real estate, linked transactions, unusual funding arrangements and transactions inconsistent with a client’s known circumstances can all increase risk. Its separate thematic review of source-of-funds and source-of-wealth compliance previously found high-risk conveyancing matters being handled without evidence of appropriate checks on file. The regulator also reported that 73% of the suspicious activity reports it submitted to the National Crime Agency between April 2023 and April 2025 related to conveyancing matters.

The August assessment also reflects newer risks. It highlights AI-enabled fraud, synthetic identity and deepfake risks in remote onboarding, stablecoins and other cryptoassets where provenance cannot be established, and sanctions-evasion risks involving complex ownership, intermediary jurisdictions and concealed beneficial ownership.

Industry data suggests firms are responding operationally. SmartSearch says source-of-funds check volumes on its platform increased tenfold in the first half of 2026, driven mainly by residential property transactions but with growth across wealth, investment and lending. The company also points to growing use of Open Banking and structured digital verification to replace fragmented document collection.

For regulated firms, the direction is increasingly clear: source-of-funds work is not simply a one-off document request for exceptional transactions. It is becoming part of the wider risk assessment, onboarding and ongoing evidence trail used to explain why funds are considered legitimate and whether the client relationship remains consistent with the firm’s understanding of the customer.