Law firm fined after SRA finds prolonged failures in money laundering risk assessments
The Solicitors Regulation Authority has fined KnightStone Legal Services Limited £7,776 following an investigation into its compliance with anti-money laundering requirements.
The regulatory outcome was reached by agreement on 19 January 2026 and published on 23 January 2026. As part of the settlement, the firm has also agreed to the publication of the decision and to pay £600 towards the SRA’s investigation costs.
The investigation was launched after a review by the SRA’s AML Proactive Supervision team. That review identified concerns about the firm’s compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017, alongside breaches of the SRA Principles and the SRA Code of Conduct for Firms.
The SRA found that, prior to August 2024, the firm had failed to maintain records of client and matter risk assessments as required under Regulation 28 of the 2017 regulations. As a result, the firm was unable to demonstrate that the measures it had taken to comply with its statutory obligations were appropriate.
In addition, between 13 March 2018 and 16 August 2024, the firm failed to have in place a documented firm-wide risk assessment identifying the risks of money laundering and terrorist financing to which its business was exposed. The SRA concluded that this failure breached Regulations 18(1) and 18(4) of the 2017 regulations, which require firms to assess, record and regularly review such risks.
The firm admitted that its conduct breached a range of regulatory requirements spanning two regulatory regimes. For the period prior to November 2019, those breaches included failures to maintain effective systems and controls, to comply with anti-money laundering legislation, and to uphold public trust in the provision of legal services. For conduct occurring from November 2019 onwards, the firm admitted breaches relating to governance arrangements, compliance with applicable law and regulation, and the obligation to uphold public confidence in the solicitors’ profession.
In deciding that a financial penalty was appropriate, the SRA took into account mitigating factors. It noted that there was no evidence of harm to clients or third parties and assessed the risk of repetition as low. The firm had brought itself into compliance in August 2024 by adopting written client and matter risk assessments and a firm-wide risk assessment. The firm also cooperated with both the SRA’s proactive supervision and investigation teams.
However, the regulator concluded that the failures showed a disregard for statutory and regulatory obligations and carried the potential to facilitate money laundering or terrorist financing. The SRA emphasised that the absence of recorded risk assessments over an extended period was particularly serious, given the firm’s involvement in high-risk conveyancing work.
Applying its financial penalty guidance, the SRA assessed the nature of the misconduct as more serious and the risk of harm as moderate. This placed the penalty within Band C. After taking mitigation into account, the fine was set at £7,776, with no adjustment required for financial gain.