UK Law Firm Fined £10,462 Over Anti-Money Laundering Compliance Failures

Castle Sanderson Limited has been ordered to pay a financial penalty of 10,462 pounds after reaching a regulatory settlement with the Solicitors Regulation Authority (SRA). The Leeds-based legal practice, which offers services including conveyancing, wills, and probate, was sanctioned following an investigation that identified ongoing deficiencies in its anti-money laundering (AML) systems. Regulators found that the firm failed to maintain sufficient internal policies and did not carry out required risk assessments across multiple legal matters. The enforcement action serves as a clear public warning that legal professionals must meet strict statutory duties aimed at preventing financial crime.

The SRA investigation uncovered substantial weaknesses in the core components of financial crime prevention within the firm. From June 2017 through May 2025, Castle Sanderson Limited failed to regularly review or update its internal policies, controls, and procedures. These governance documents are critical for identifying and reducing the specific risks law firms face in relation to illicit financial activity. By not updating these protocols to reflect evolving legislation and emerging criminal methodologies, the firm remained exposed to potential misuse by individuals seeking to launder illegal funds, particularly through property transactions.

Regulators further concluded that the firm did not properly address risks highlighted in its firm-wide risk assessment. This document is intended to underpin a strong compliance culture, but the lack of continuous review meant the firm was effectively operating with outdated safeguards. Such failures are considered serious regulatory breaches because they suggest disregard for statutory obligations designed to safeguard the integrity of the United Kingdom’s financial system. Authorities stress that compliance is an ongoing responsibility that must evolve alongside increasingly sophisticated methods used to conceal the origins of illicit funds.

In addition to broad systemic shortcomings, regulators identified specific operational failings relating to client and matter risk assessments. During file reviews, inspectors found that in 34 separate cases the firm failed to perform mandatory assessments of both clients and the legal matters being handled. These checks are required under the 2017 regulations to ensure legal professionals understand both the identity of their clients and the nature of the funds involved in transactions. Without these case-specific evaluations, firms cannot properly determine the level of due diligence required for individual matters.

The risk exposure was particularly serious given that most of the firm’s work involved conveyancing. The property sector is widely regarded as high risk for money laundering because it allows large sums of money to be transferred through single transactions. Criminal organizations frequently attempt to use law firms to facilitate property purchases, relying on the credibility of legal professionals to create the appearance of legitimacy. By failing to complete matter-level risk assessments, the firm bypassed an essential gatekeeping responsibility, increasing the risk that criminal proceeds could be moved through the housing market.

The disciplinary outcome identified breaches of multiple core professional principles governing solicitors in England and Wales. Under both the 2011 regulatory framework and the updated 2019 standards, legal firms must operate in ways that maintain public trust and protect the reputation of the legal profession. The regulator determined that failures in governance, oversight, and internal controls breached obligations requiring firms to run their businesses effectively and in line with sound risk management practices. The SRA noted that the public expects legal professionals to meet baseline standards in complying with laws designed to combat terrorism financing and organized crime.

When calculating the financial penalty, regulators considered both the seriousness of the conduct and the potential harm caused. The breaches were classified as more serious due to the fact that the compliance failures continued for nearly ten years, despite multiple warning notices and guidance publications issued by the regulator. Although there was no direct evidence of actual money laundering or client financial loss, the potential harm was assessed as medium. This assessment reflected both the inherent risks associated with conveyancing work and the firm’s lack of documentation demonstrating proper scrutiny of client source of funds.

In agreeing to the settlement, the regulator acknowledged several mitigating circumstances that reduced the final penalty amount. Castle Sanderson Limited fully cooperated with supervisory and investigative teams once the deficiencies were identified. The firm also took immediate corrective action by implementing updated AML policies and introducing extensive staff training programs. The training focused heavily on documenting and verifying source of funds checks, which are a critical part of modern financial crime prevention frameworks.

The final sanction required the firm to pay 10,462 pounds in fines in addition to 600 pounds in investigative costs. Regulators described the penalty as proportionate and necessary to uphold professional standards across the legal sector. The SRA also noted that the firm had already reviewed active case files to ensure that current matters are now being assessed in accordance with regulatory requirements. By making the details of the settlement public, the regulator aims to reinforce deterrence across the legal profession. The case ultimately sends a strong message that even firms with no proven involvement in criminal activity must maintain strict administrative controls and operational discipline to remain compliant with the law.

By fLEXI tEAM