SRA Tightens Scrutiny on Small Law Firms After AML Failures Lead to Fine for Newcastle Practice

The Solicitors Regulation Authority is placing increasing emphasis on supervising smaller legal practices, demonstrated by a recent £1,596 fine issued to a Newcastle-based firm following serious failures in money laundering record-keeping. The enforcement action against Caisson Turner Legal Services reflects a broader shift in regulatory strategy, where smaller firms are no longer shielded from proactive oversight based on their size. The SRA investigation revealed an eight-year period of non-compliance tied to missing documentation of risk assessments required under the Money Laundering Regulations 2017. As part of a regulatory settlement reached in February 2026, the firm also agreed to pay £600 in investigative costs.

At the center of the case was the firm’s long-running failure to meet requirements under Regulation 28 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. From June 2017 through July 2025, the practice did not maintain records documenting client and matter risk assessments. Within the legal profession, these assessments are considered essential safeguards against illicit money entering the financial system. Without documented evidence explaining why a client was categorized as either low or high risk, firms cannot demonstrate that they have applied proper due diligence or that their internal controls align with the risk profile of their work.

During a review conducted by the regulator’s proactive supervision team, investigators examined a selection of case files and found that five out of six lacked any documented risk assessment before legal services began. This requirement is fundamental, as risk assessments must inform a firm’s approach from the very start of a client relationship. The firm eventually addressed the issue in July 2025 by implementing a standard template provided by the regulator. However, this delay meant that for nearly ten years, the firm operated without sufficient safeguards to detect potentially suspicious transactions or activity linked to terrorist financing.

Regulatory focus on smaller firms reflects a growing effort by the SRA to remove perceived weak points in the UK’s anti-money laundering system. While larger law firms often have dedicated compliance teams, smaller practices and sole practitioners must balance regulatory obligations alongside core legal work. The SRA has made it clear that money laundering risks do not decrease simply because a firm is small or located outside major financial centers such as London. In some cases, smaller firms may be targeted by criminals who assume oversight may be less rigorous or that client relationships may be handled more informally.

The investigation into the Newcastle firm was initiated through a desk-based review, demonstrating how regulators are increasingly using data and reporting tools to identify compliance failures without conducting on-site inspections. This approach allows oversight of firms of all sizes. In this case, the SRA determined that the failures showed disregard for statutory responsibilities and had the potential to create significant public risk. The regulator emphasized that the public expects all solicitors, regardless of firm size, to act as safeguards against financial crime.

Protecting the reputation of the legal profession was a key factor in the disciplinary action. By failing to maintain required records for more than eight years, the firm was found to have breached the SRA Principles introduced in both 2011 and 2019. Specifically, the conduct represented a failure to behave in a way that upholds public trust and a failure to manage business operations in line with sound financial risk management standards. For legal professionals, adherence to money laundering regulations is a core licensing obligation rather than an optional administrative exercise.

The £1,596 penalty was calculated based on the firm’s turnover and the classification of the misconduct as “more serious.” Although regulators concluded that the real-world impact was limited because there was no evidence of actual money laundering activity, the “recklessness” associated with the failures resulted in a higher severity assessment. The SRA uses financial penalties to create credible deterrents across the sector, making clear that even technical breaches, including poor record-keeping, can result in fines and public disclosure. Mandatory publication of settlement agreements also ensures transparency, allowing clients, insurers, and other stakeholders to review a firm’s compliance history.

The resolution of the case represents a reset point for the firm, which has since updated its systems to ensure that all relevant files now contain completed risk assessments. For the wider legal sector, the case sends a clear message that regulatory attention is no longer limited to large firms. All authorized practices must ensure their governance systems and internal controls meet the requirements of the 2017 regulations and the SRA Code of Conduct for Firms. The financial burden of non-compliance, including both fines and investigative costs, can be particularly significant for smaller businesses.

Going forward, firms must place greater emphasis on documenting how compliance decisions are made. It is no longer sufficient to rely on informal assessments of client risk. These determinations must be properly recorded, dated, and stored in a format that can be produced during regulatory audits. As the SRA continues to expand its proactive supervision approach, smaller firms are encouraged to carry out internal compliance reviews to identify weaknesses before regulators intervene. Meeting these requirements is not only about avoiding financial penalties but also about preserving the legal profession’s role as a trusted and secure component of the global financial system.

By fLEXI tEAM