The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 (SI 2026/621) came into force on 30 June 2026. For law firms, conveyancers and other legal sector professionals regulated under the Money Laundering Regulations, these changes are already in effect and require a review of existing policies and procedures.
Why these amendments were introduced
The 2026 amendments follow a government consultation on improving the effectiveness of the UK’s AML regime. The stated aim was to make the regulations more proportionate, clearer in their application, and better aligned with the Financial Action Task Force (FATF) standards the UK is expected to meet ahead of its mutual evaluation.
The changes are targeted rather than wholesale. The core structure of the Money Laundering Regulations 2017 remains in place, but several provisions have been updated in ways that matter practically for how legal sector firms operate day to day. They also land at a moment of broader change for the sector since the government has confirmed that the Financial Conduct Authority (FCA) will eventually replace the SRA and other professional body supervisors as the single AML supervisor for legal services, though that transition requires new primary legislation and is unlikely to take effect before 2027 at the earliest. For now, the SRA remains the relevant supervisor, and the 2026 amendments should be implemented in line with current SRA expectations.
The key changes for legal sector firms
1. Enhanced due diligence: a narrower trigger
One of the most significant changes for the legal sector is the adjustment to when enhanced due diligence (EDD) is automatically required.
Under the previous rules, EDD was mandatory for transactions that were “complex or unusually large.” Size and complexity operated as two separate triggers: a transaction could be complex regardless of its value and that alone would require EDD. In practice, given how many legal transactions involve multiple parties, offshore elements or layered structures, the “complex” limb was broad enough to capture a significant amount of routine work.
The 2026 amendments narrow the complexity trigger. EDD is now required where a transaction is “unusually complex or unusually large, in each case given the nature of the transaction.” The word “unusually” now applies to both limbs. This is not simply a tightening of the large transaction threshold; it is a meaningful change to when complexity alone justifies EDD.
For a conveyancing team that regularly handles transactions involving corporate buyers, offshore trustees or multi-party structures, the question is no longer whether the transaction is complex on its face. It is whether it is unusual relative to what that firm would normally encounter. A small transaction can still require EDD if it is unusually complex for that practice. A large transaction can still require it if the value is unusual for that client type or matter. The assessment is contextual and relative, which is precisely what the amendment is intended to achieve.
Amongst the new guidelines it is important to also note what has not changed. The requirement to apply EDD based on a high risk of money laundering or terrorist financing remains. Firms should not read this amendment as a licence to reduce vigilance, the point is proportionality, not relaxation. If a transaction genuinely presents heightened risk, EDD is still expected, regardless of whether it meets the “unusually complex” threshold or not.
The amendments also clarify the treatment of high-risk third countries. Previously, being established in a country on the FATF grey list triggered automatic EDD. Under the new rules, automatic EDD is reserved for countries on the FATF Call for Action list, which currently means Iran, North Korea and Myanmar. Countries on the FATF increased monitoring list remain relevant risk factors under the regulations and should continue to be considered in risk assessments, but they no longer automatically mandate EDD.
2. Pooled client accounts: new obligations for firms providing access
The amendments introduce new CDD requirements for firms that operate pooled client accounts and provide customers with access to them.
Under the changes, firms must now assess the level of money laundering and terrorist financing risk associated with the customers using those accounts and take reasonable steps to manage and mitigate those risks. Customers using the accounts are required to maintain written records in respect of the account and to provide that information on request.
For most law firms, this will be familiar territory. Solicitors’ accounts rules already require careful record keeping around client funds. The distinction the 2026 amendments introduce is that this record keeping is now framed explicitly as an AML obligation, not just an accounts compliance requirement.
The practical implication is that firms should review how their existing pooled account controls are documented. An inspection focused on AML compliance will look at whether the firm has assessed the ML/TF risk associated with pooled accounts, not simply whether the accounts are properly maintained under accounts rules. Those are related but separate questions, and firms should be able to demonstrate that both have been addressed.
3. Trust Registration Service: extended scope for non-UK trusts
The amendments expand the scope of the Trust Registration Service (TRS) to include all non-UK trusts that hold an interest in UK land or property acquired before 6 October 2020.
This addresses a gap in the existing rules that had left some older offshore trust structures outside the registration requirement. Firms advising on property held through non-UK trusts, or advising trustees or beneficiaries of such structures, should check whether registration is now required.
The amendments also introduce a de minimis exemption for certain low-risk, low-value trusts that would otherwise be required to register. Firms will need to assess whether any trusts they advise on fall within this exemption, which is intended to reduce administrative burden on straightforward structures that present low money laundering risk.
There is a time-limited element to the TRS expansion. Trusts that fall within the new scope because of the pre-October 2020 property acquisition rule will need to register within a set period following the regulations coming into force. Firms acting for affected trusts should not treat this as a longer-term consideration.
What firms should do now
The 2026 amendments are in force. That means any policies, procedures and systems that have not been reviewed against these changes are already out of date.
The following is a practical starting point for compliance leads and MLROs.
Review EDD triggers. Check whether your firm’s policies define when EDD applies and whether those definitions reflect the new “unusually complex or unusually large” threshold rather than the previous broader trigger. Firms in practice areas where complexity is routine, such as commercial property or multi-party corporate transactions, have the most to gain from this review.
Assess pooled account risk documentation. Consider whether your existing pooled account controls are documented in a way that satisfies both your accounts rules and the new AML-specific requirements. The two frameworks overlap, but they are not identical. Your AML supervisor will expect to see explicit ML/TF risk assessment, not just clean accounts records.
Check TRS obligations for trust clients. If your firm advises trustees, beneficiaries or settlors of non-UK trusts that hold UK property acquired before October 2020, those trusts may now be in scope for TRS registration. Act promptly rather than waiting for a client query to prompt the review.
Update monetary thresholds. The 2026 amendments convert a number of thresholds previously expressed in euros to pounds sterling. Firms should check policies, procedures and case management systems for any references to euro-denominated limits and update them accordingly.
Document your risk rationale. The question regulators are increasingly asking is not simply whether a firm has completed a risk assessment, but whether it can explain why it reached the conclusions it did. The 2026 amendments reinforce that expectation. When applying the new EDD threshold, for example, firms should record why a transaction was or was not considered “unusual” for their practice. This matters beyond the current regulatory environment too: with the FCA expected to take over AML supervision of the legal sector from 2027, building a clean, auditable compliance record now is good preparation for a more data-driven supervisory model.
The 2026 amendments are not a fundamental overhaul of the UK’s AML regime. But they do require action. Policies written against the 2017 regulations, without subsequent review, are unlikely to reflect the current requirements accurately.
Jon Parish, KYC-AML Compliance Manager from Credas, commented “The 2026 amendments recognise that an overly rules-based interpretation of the Regulations (whilst potentially more straightforward to apply in theory) can, in practice, create disproportionate compliance burdens that do not accurately reflect the true risk posed by a client or transaction. By placing greater emphasis on rationale and proportionality, the changes encourage firms to tailor CDD to their specific risk exposure, client profile and business activities, supporting a more effective and practical approach to financial crime prevention.”
Firms should also ensure their approach is consistent with the Legal Sector Affinity Group (LSAG) guidance on AML, approved by HM Treasury in April 2025. The LSAG guidance is the standard against which SRA-supervised firms are currently assessed and will be updated to reflect the 2026 amendments in due course. In the meantime, apply the regulations directly alongside the existing guidance as the contextual framework for how those rules apply to legal practice.
If you have questions about how Credas can support your firm’s CDD and AML compliance, get in touch with our team or book a demo to see the platform in action.
