NEW AML GUIDANCE FOR PRACTICES

23 April, 2025

The Legal Sector Affinity Group (LSAG), which is comprised of all of the AML regulators in the UK including the CLC, the SRA and the Law Society of Scotland, has today released updated guidance for the legal sector.

This guidance is HM Treasury approved, and we encourage CLC practices to review the changes (which are summarised in the Schedule of Amendments section) and make any necessary alterations to their own AML policies and procedures.

Some of the key changes practices should take note of include:

 a.           Updated information relating to the payment of the Economic Crime Levy (ECL) which must be paid to HMRC if your turnover exceeds the threshold amount of £10.2 million. We would urge CLC practices to review their own turnovers and consider whether they have met the threshold or not.

b.            A new definition of high risk third countries (HRTCs) in line with the “grey” and “black” lists which are maintained by the Financial Action Task Force (FATF) and which are updated at regular meetings throughout the year.

c.            Updated content relating to the obligations under Regulation 28(3A) relating to what measures practices must take when assessing the “ownership and control structure” of the legal person, trust, company, foundation or similar legal arrangement (non-natural persons). The key point is that this obligation is wider than just identifying the beneficial owners.

d.            A new subsection on the Register of Overseas Entities – this includes basic information on what the obligations are for overseas entities who intend to buy, sell or transfer property or land in the UK (they must now register with Companies House).

e.            Clarification of the extent of due diligence on third parties who are contributing funds towards a transaction. The CLC would expect that such third party’s funds are scrutinised in the same way as a client would be with the extent of measures taken increasing with the risk level.

f.             Content relating to the treatment of Politically Exposed Persons (PEPs) which takes into account changes in 2024 which lessen the risk level in relation to domestic PEPs when compared with non-domestic PEPs.

g.            Updated content relating to the Economic Crime and Corporate Transparency Act (ECCTA) which introduced, as an example, some additional defences to principal money laundering offences.

See our Anti-Money Laundering Toolkit