Pooled accounts are bank accounts used to hold funds for multiple clients and are commonly used by solicitors in conveyancing, probate and corporate matters.
The draft Money Laundering, Terrorist Financing (Amendment and Miscellaneous Provision) Regulations 2025, published for consultation last month, ‘decouples’ pooled client accounts from the simplified due diligence framework under which they are treated by banks as ‘low risk’. Instead, financial and credit institutions would need to take reasonable measures to understand the purpose, gather information and assess the risks associated with the account, with additional controls imposed where appropriate to manage risk.
Firms holding the pooled client account would, on request, need to provide the bank with information about the identity of the clients.
Responding this week to the Treasury’s consultation, the Law Society emphasised that full due diligence would be required on all clients—regardless of the assessed risk level and despite safeguards already inherent in pooled account structures.
Consequently, the draft regulations may cause delays, increase costs and reduce access to justice for the public as well as weaken defences against criminals, the Law Society warned.
Richard Atkinson, Law Society president, said ‘imposing blanket obligations’ would be ‘disproportionate, operationally burdensome and inconsistent with previous policy.
‘By eroding the risk-based approach—where solicitors have the option of applying simplified due diligence in low-risk circumstances—the UK’s defences against economic crime would be undermined and compliances resources diverted away from higher-risk cases, while creating unnecessary work in low-risk contexts.
‘We urge HM Treasury to retain the option of applying simplified due diligence in pooled accounts, where the risk assessment supports it.’
Atkinson said full due diligence on pooled accounts would impose a ‘significant administrative and financial burden on legal practices—particularly on small and medium-sized firms’.
He argued there was no compelling evidence to date that the current approach to pooled accounts ‘presents a systemic risk to the UK’s [anti-money laundering] regime. Without clear evidence of abuse or regulatory failure, the proposed amendment appears disproportionate and misaligned with the principles of better regulation’.
