header-logo header-logo

01 October 2025
Issue: 8133 / Categories: Legal News , Legal services , Regulatory , Risk management , Fraud
printer mail-detail

Due diligence headache for smaller firms?

Proposed legislation to tighten the rules on pooled client accounts would place ‘substantial’ burdens on solicitors, the Law Society has warned

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’.

MOVERS & SHAKERS

NLJ Career Profile: John McElroy, London Solicitors Litigation Association

NLJ Career Profile: John McElroy, London Solicitors Litigation Association

From first-generation student to trailblazing president of the London Solicitors Litigation Association, John McElroy of Fieldfisher reflects on resilience, identity and the power of bringing your whole self to the law

Clarke Willmott—Elaine Field

Clarke Willmott—Elaine Field

Planning and environment team expands with partner hire in Manchester

Birketts—Barbara Hamilton-Bruce

Birketts—Barbara Hamilton-Bruce

Firm appoints chief operating officer to strengthen leadership team

NEWS
A wave of scandals has reignited debate over misconduct in public office, criticised as unclear and inconsistently applied. Writing in NLJ this week, Alice Lepeuple of WilmerHale says the offence’s ‘vagueness, overbreadth & inconsistent deployment’ have undermined confidence
FIFA’s 2026 Men's World Cup is already mired in controversy, with complaints over ‘excessive prices’ and opaque ticketing. Writing in NLJ this week, Professor Dr Ian Blackshaw of Valloni Attorneys warns that governing bodies may face scrutiny under EU competition law, with allegations of a ‘dominant—if not monopolistic—position’ in ticket sales
Ten years after Brexit, UK and EU trade mark regimes are drifting apart in practice if not principle. Writing in NLJ this week, Roger Lush and Lara Elder of Carpmaels & Ransford highlight tighter UK scrutiny after SkyKick, where overly broad filings may signal ‘bad faith’
A landmark Supreme Court ruling has underscored the sweeping reach of UK sanctions. In NLJ this week, Brónagh Adams and Harriet Campbell of Penningtons Manches Cooper say the regime is a ‘blunt instrument’ requiring only a factual, not causal, link to restricted goods
Fraud claims are surging, with England and Wales increasingly the forum of choice for global disputes. Writing in NLJ this week, Jon Felce of Cooke, Young & Keidan reports claims have risen sharply, with fraud now a major share of litigation and costing billions worldwide
back-to-top-scroll