The Solicitors Regulation Authority's (SRA) Anti-Money Laundering Annual Report, published on 22 October 2026, covers April 2025 to April 2026 and shows that firms are improving. The proportion assessed as non-compliant fell from 32.4% to 21.9%. Source of funds is where progress is the slowest, and conveyancing remains the work the regulator still describes as high risk.

Where source of funds checks still fall short

Of the 5,349 files reviewed that required source of funds or source of wealth checks, 9% contained no source of funds check at all, down from 11% in the SRA's thematic review last November. Where evidence had been collected, the SRA again found that it had not been properly scrutinised on 18% of files. In 6% of files, the source of funds recorded on the ledger did not match the evidence on file, compared with 8% previously. A drop in these numbers compared to the last report is promising, but there is still room for improvement.

Failure to carry out a source of funds check was the second most common reason for AML reports to the SRA this year, with 111 reports. Two thirds of the firms referred over source of funds issues already had a defined process in their written policies. The SRA's conclusion is that the quality of scrutiny is often a bigger problem than the collection of documents.

Conveyancing is central to the regulator's concern. The thematic review noted that 73% of the SARs the SRA submitted to the National Crime Agency between April 2023 and April 2025 related to conveyancing, and this year's report lists property transactions with source of funds concerns and suspected third-party involvement among the red flags it reported.

Identity verification is on firmer ground

Client identification is the stronger control. Five per cent of files lacked evidence that the client had been identified and verified, and almost 93% of the firms the SRA met used electronic identification and verification technology.

The regulatory position is also clearer. Guidance published by HM Treasury and the Department for Science, Innovation and Technology on 26 February 2026 confirms that certified and registered Digital Verification Services can be relied on to verify an individual client's identity under Regulation 28 of the MLRs. Crucially, the SRA's report repeats that services not on the DVS Register cannot reliably be deemed suitable.

Responsibility stays with the firm. Firms must still assess client risk, should not assume digital identity covers every part of customer due diligence, and must keep records under Regulation 40. HM Land Registry's Safe Harbour standard is separate from the DVS Register, so a provider describing itself as Safe Harbour compliant is not automatically listed. A certified provider confirms who the client is, and the SRA's findings show that the next question, where the money has come from, is the one more files fail to answer.

What firms should do

The thematic review and annual report point to a small number of habits that make the difference, particularly when completions bunch up before the end of the year:

  • Establish source of funds before substantial work begins and before money reaches the client account.
  • Test the evidence against the client's account and the funds required, and record the reasoning so the firm can show its supervisor why the checks applied matched the risk.
  • Compare funds received with what the file anticipated, and investigate changes such as a mortgage replaced by a private payment or an unexpected third-party payer.
  • Use controls that stop a matter progressing until source of funds has been established. The SRA criticises processes that let files move to the next stage unchecked.

Firms are improving, and the SRA still lists source of funds among the areas that need work. A useful test for conveyancers is whether someone could explain, from the file alone, why the money in a transaction is legitimate.

Credas is listed on the government's DVS Register and brings identity verification, AML screening and source of funds checks into a single onboarding journey. To find out more, visit Credas.