Most law firms are aware that AML regulation is changing but fewer realise that three significant developments are converging in the same window and each one demanding a response and together representing the most pressure the sector has faced on AML compliance in years.
Here is what is happening, when it lands, and what it means for your firm.
1. COLP and COFA Roles Must Be Separated from Senior Management
Earlier this month, the SRA confirmed it is pressing ahead with one of the most structurally significant changes to firm governance in recent years. Subject to Legal Services Board approval, new rules will require that any individual who can unilaterally determine or direct significant management decisions cannot also hold the COLP or COFA role.
The rules apply to firms with annual turnover above £600,000 or holding more than £2 million in client money at any point in the most recent accounting period. That threshold captures the vast majority of active practices.
The SRA wants to eliminate the concentration of power that allowed problems to go unreported at firms such as Axiom Ince where the person responsible for compliance is the same person making the commercial decisions, challenge becomes structurally difficult. The new rules are intended to fix that.
For AML specifically, this matters more than it might initially appear. If your current COLP is also a decision-making partner, your firm’s AML framework such as the risk assessments, the escalation process, the oversight of fee earner conduct may need to be rebuilt around a different person. It’s a genuine significant change that requires genuine knowledge transfer, clear lines of authority, and time. Subject to LSB approval, it is expected to come into force in early 2027 and firms need to prepare now.
For many firms, sorting the COLP separation will also prompt a harder conversation about the MLRO role. The SRA’s own data showed that over a quarter of regulated firms had a single individual holding COLP, COFA, and MLRO simultaneously. While the formal rule change targets the COLP and COFA specifically, the underlying concern is the same. Where one person controls both the commercial decisions and the AML framework, genuine independent oversight becomes impossible.
2. The SRA’s Competence Consultation — Fee Earner AML Knowledge is Now Formally in the Spotlight
On 22 April 2026, the SRA opened a consultation titled Strengthening our continuing competence approach. It runs until 15th July 2026 and proposes the most significant change to how solicitors evidence their competence.
Under the proposals, all solicitors would be required to keep a documented record of how they are reviewing and addressing their learning and development needs with a clear expectation that this is reflective, risk-based, and evidenced.
The AML implications are direct. The SRA’s proactive supervision visits have consistently found that the weakest point in most firms’ AML frameworks is not the written policy, but it is whether fee earners understand it, apply it correctly, and can articulate why they made the decisions they did on individual files. A compliance officer who cannot demonstrate that their team has been trained on, and genuinely understands, the firm’s AML obligations will face considerably harder questions under the new regime.
Rule changes require Legal Services Board approval before taking effect but the SRA’s inspection approach already reflects these expectations. The firms that wait for formal rules before acting will be behind.
3. The FCA Transition and the MLR Amendments — The Bar is Already Rising
In October 2025, HM Treasury confirmed that the Financial Conduct Authority will become the single professional services supervisor for AML. The 22 private sector bodies currently supervising legal and accountancy services will no longer carry out that function. A commencement date has not yet been set, but the direction is confirmed and the transition is underway.
The FCA brings a fundamentally different supervisory culture to AML, one built around documented reasoning, auditable decision-making, and the ability of firms to demonstrate not just that controls exist, but that they work in practice. That is a meaningfully higher bar than most law firms have historically been assessed against.
What makes this more urgent is that the regulatory framework itself is already tightening ahead of the transition. The Money Laundering and Terrorist Financing (Amendment) Regulations 2026, laid before Parliament on 25 March 2026 and expected to come into force in late June or early July, introduce targeted changes to how firms are expected to apply risk-based judgement. The trigger for enhanced due diligence has been narrowed to transactions that are “unusually complex or unusually large” a deliberate move away from mechanical, over-cautious approaches toward genuine, documented risk assessment. The message is clear that box-ticking is no longer enough and firms need to show they are thinking, not just checking.
Taken together, the FCA transition and the MLR amendments point in the same direction. The question firms need to be asking now is not whether they are currently SRA-compliant. It is whether their AML framework, the policies, the risk assessments, the fee earner training records, the documented reasoning on individual files would hold up under a regulator that expects evidence.
What This Means Together
The COLP/COFA separation requires firms to restructure who is responsible for compliance. The MLR amendments and FCA transition mean the standard firms are being measured against is changing and it is stricter.
Taken individually, each development is manageable. Together, they point to the same conclusion meaning a firm’s AML framework needs to be robust, documented, and explainable.
The firms that come out of this period in the strongest position will be those that have taken the time to assess whether their framework actually works — not just whether it exists.