Watermans fined after SRA finds prolonged failures in AML controls and risk assessments
The Solicitors Regulation Authority has fined London law firm Watermans after finding prolonged failures in its anti-money laundering controls and client risk assessments.
Watermans, a recognised body based in Palmers Green, agreed to a regulatory settlement under which it will pay a financial penalty of four thousand five hundred and eighty-four pounds, alongside six hundred pounds in investigation costs. The outcome was published on 6 January 2026 following an agreement reached on 8 December 2025.
The SRA investigation followed an inspection by its AML Proactive Supervision Team and a subsequent desk-based review. This identified areas of concern relating to the firm’s compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017, as well as the SRA Principles and Codes of Conduct in force before and after November 2019.
According to the agreed findings, between June 2017 and September 2025 the firm failed to maintain compliant policies, controls and procedures designed to mitigate the risks of money laundering and terrorist financing. The regulator found that these measures were not adequately reviewed or updated in line with regulatory requirements.
The SRA also examined a selection of client files and found that five out of six did not contain a documented client and matter risk assessment. As a result, the firm was unable to demonstrate that appropriate steps had been taken to assess and manage money laundering risks, as required under the regulations.
In addition, the firm confirmed that it had been required to retrospectively assess thirty-two live in-scope files which had not previously been supported by documented risk assessments. Twenty-two of these files were classified as medium risk, despite the absence of any recorded client and matter risk assessment at the time.
The firm admitted that its failures breached both the former and current SRA regulatory frameworks, including principles requiring firms to maintain public trust, ensure effective governance, and comply with applicable legislation. The SRA accepted those admissions.
In explaining why a financial penalty was appropriate, the regulator said the conduct demonstrated a disregard for statutory and regulatory obligations and had the potential to facilitate money laundering or terrorist financing. Although no evidence of actual harm to clients or third parties was identified, the SRA said the firm’s work included a significant proportion of conveyancing matters, which are considered high risk.
The SRA assessed the nature of the misconduct as more serious and the risk of harm as medium, placing the penalty in band C under its published guidance. The initial penalty was reduced to reflect the firm’s cooperation, transparency and steps taken to remedy the breaches.
The SRA said the firm did not financially benefit from the misconduct and that there was a low risk of repetition. It concluded that publication of the agreement was in the public interest to promote transparency and maintain confidence in the profession.