By Legal Futures Associate Checkboard [1]
In April, the SRA issued its first fixed penalties for AML information failures, fining three firms £750 each for failing to hand over AML and sanctions data.
Although the amounts are modest, it’s a clear signal of the direction of travel within AML enforcement.
Those penalties come in light of the regulator’s new unlimited fining powers under the Economic Crime and Corporate Transparency Act.
The SRA has provided an example of how those powers might apply: a firm with £5 million turnover that fails to scrutinise source of funds across multiple conveyancing transactions could face a fine of as much as £400,000.
Source of funds is clearly under the microscope. The SRA’s most recent thematic review [2]—which examined 5,873 files across 833 firms—found that more than one in ten files had no source of funds work on them at all, while many that did fell seriously short.
The problem isn’t the paperwork
The problem identified by the SRA isn’t that firms are failing to gather the required paperwork, it’s that they’re collecting information and then not actually using it to reach a judgement.
Having bank statements saved against a client’s file isn’t the same as a documented view on whether their deposit is actually consistent with their profile, or whether a last-minute third-party contribution makes sense given what the firm has been told.
So, once the regulators start asking forensic questions about a client’s source of funds, the firm won’t be able to provide the right answers. The documents are there, but if they haven’t been reviewed, they’re essentially useless.
Law firms that still rely on manual collection from emails, scanned documents, checklists, and in-person visits are particularly vulnerable to scrutiny.
A higher standard of evidence
This is where Checkboard comes in.
Checkboard’s source of funds gives firms a structured way to document both the origin of a client’s funds and the firm’s analysis of them.
Clients can link their financial accounts through open banking, giving firms a clear view of how the funds were accumulated, and transaction-level data that can be instantly flagged for inconsistencies.
The result is a complete, auditable record of the origin of funds compared against the evidence the client has provided. It’s clear, readable, and ready to be shared with the SRA as proof the firm has done its due diligence.
Combined with biometric identity verification, Checkboard gives firms a single onboarding workflow that meets the bar regulators now expect.
Audit-ready, instantly
The SRA is demanding a new focus on genuine scrutiny. It doesn’t just want to see the boxes have been ticked, but that real work has been done to identify and isolate client risk.
Whether you are reviewing your AML controls ahead of an inspection, refreshing your conveyancing workflow, or taking a fresh look at your documentation procedures, Checkboard can get you there.
Get in touch to find out more [3].