Treasury releases latest technical consultation on money laundering
The Treasury has released its latest consultation notes, which looked at the draft Money Laundering and Terrorist Financing Regulations 2025. The notes have met with wide backlash, particularly from the Law Society.
The changes centre around pooled client accounts, and the Law Society argues the proposed changes in the notes could cause “significant and uncertain compliance burdens”.
They also argue firms will face further costs to follow the new regulations in place meaning firms could see a hit to their profits as costs increase to complete their work.
What changes have been proposed?
The draft proposes a big change in how solicitors conduct due diligence on pooled client accounts. This would see solicitors completing full due diligence rather than standard due diligence on these accounts.
The changes would increase the administrative tasks and financial burdens, alongside attempting to remain compliant with the regulatory guidelines.
What would the changes mean to law firm finances?
For law firms and solicitors, it’s another unwanted cost. Completing due diligence on these accounts will be more expensive and that means your finances will be affected.
With more funds needed to complete your work, the profits you make become smaller as operational costs increase. This leaves you with very little scope as your profits reduce.
You will also need to assess your current processes for handling pooled client accounts. The change would mean further work and information will be required, which means your processes may need to accommodate that, even if your safeguard and risk level assessments are effective.
Speaking about the consultation notes, the Law Society President Richard Atkinson said: “Requiring full due diligence on all underlying clients of pooled accounts would impose a significant administrative and financial burden on legal practices —especially small and mid-sized firms.
“This change may result in delays, increased costs, and reduced access to legal services for the public.”
How can your firm prepare for any additional costs?
The best approach for preparing for any additional costs to the work you do is to have a good understanding of your firm’s finances to see how these costs would impact your financial position.
You can then plan diligently and put measures in place that mean you can handle any regulatory changes and this is where our team can help.
We can help you build a clear picture of your firm’s finances, look at your incomings and expenditures and audit your firm to see where money is being lost so you have the resources available.