UK National Risk Assessment of Money Laundering and Terrorist Financing 2025

The UK’s fourth National Risk Assessment of Money Laundering and Terrorist Financing, jointly developed by HM Treasury and the Home Office was published in July. The Law Society of Northern Ireland’s Head of AML Policy, Brian Carson, reviews the 2025 NRA, its key findings for the legal sector and its importance for solicitors and their firms.

What is the National Risk Assessment (NRA) of Money Laundering (ML) and Terrorist Financing (TF)?

The NRA is the UK’s stock-take of money laundering and terrorist financing risks.

Under the Money Laundering Regulations 2017 HM Treasury and the Home Office must undertake a risk assessment to identify, assess, understand, and mitigate the risks of money laundering and terrorist financing affecting the United Kingdom and prepare a joint report setting out the findings of the risk assessment.

The 2025 NRA is the first update since 2020 and draws on information collected by the government, supervisors, law enforcement agencies, and the private sector and takes account of the latest developments and information.

For the regulated sector, including solicitor firms, it provides essential insight into how their services may be exploited for illicit purposes, and guidance on how these threats can be identified and mitigated.

Are there any differences to the structure of the 2025 NRA?

In addition to setting out the overarching money laundering risks faced by the UK and explaining the main crime threats that generate illicit funds, the 2025 NRA now includes greater detail on the main money laundering typologies in section 3.

Section 3 is relevant to all sectors and should be read in addition to the sector-specific activities in section 5. Sectors include ‘Legal Service Providers’ and ‘Trust or Company Service Providers’.

The included typologies ‘Property’, ‘Companies and Trusts’, and ‘Professional Enablers’ are of note.

Section 3 also contains information about how to relate the NRA to System Prioritisation. As part of the government’s commitments in the Economic Crime Plan 2 2023-26, System Prioritisation aims to publish a list of economic crime priorities to inform public-private resource.

What are the key findings for the legal sector?

• Legal Service Providers continue to be assessed at High risk of ML and Low risk of TF.

• Trust or Company Service Providers (TCSPs) continue to be assessed at High risk of ML. However, TCSPs have been assessed at an increased (from Low) to Medium risk of TF (see table) [see table at p.11 in the magazine].

• There has been no significant change in vulnerabilities to ML risk for Legal Service Providers since the 2020 NRA.

• Non-compliance levels remain relatively low across the legal sector, but the vulnerabilities the sector is exposed to and the scale of ML involving the legal sector have also remained high since 2020.

• Conveyancing, trust or company services and misuse and exploitation of client accounts continue to be assessed as the highest risk services.

• Solicitors (and other Legal Service Providers) that offer a combination of legal services are at the greatest risk in the legal sector.

• Sham litigation, identified as an emerging area of risk in the 2020 NRA, is not currently assessed to be a widespread or common issue.

• The volume of Suspicious Activity Reports (SARs) submitted by the legal sector is referenced. The decrease in the volume of Suspicious Activity Reports (SARs) submitted by the legal sector since 2020 is reported in the 2025 NRA but this decrease ‘is not judged to be indicative of a decrease in the scale of misuse of legal professionals.’

• The strength of risk mitigations for legal service providers considered in the 2025 NRA include:

- Compliance by legal professionals with their obligations under the Money Laundering Regulations.

The 2025 NRA acknowledges the investment by the majority of firms in ensuring their services are not used for criminal purposes and the low levels of non-compliance by firms. But it is reported that ‘where legal professionals are complacent, take a ‘tick box’ approach to compliance, or lack sector specific knowledge and/or training on the money laundering threat, the risk of the services provided being exploited increases.’

- Effectiveness of supervision of legal professionals by Professional Body Supervisors (PBSs), where ‘weaknesses in supervision can increase these vulnerabilities.’ The 2025 NRA reports that compliance levels at PBSs have improved since the creation of the Office for Professional Body AML Supervision (OPBAS), with an increase in the number and total value of fines issued by PBSs, from 33 fines in 2022/23 to 240 fines issued in the 2023/24 highlighted.

• The NRA 2025 reports that the increased risk of TF for TCSPs from Low to Medium has been caused by an increased understanding of how the TCSP sector is exposed to organisational TF risks and there is no information to show a change in scale of TF through the TCSP sector since 2020.

• The TF risks relate to trusts, partnerships and companies which are formed in the UK for legitimate reasons but are at risk of benefiting from proceeds generated from businesses who operate in locations where there are higher terrorist activity risks, or areas under the control of terrorist groups.

Why is the 2025 NRA important for solicitors and their firms and what should they do next?

The 2025 NRA has confirmed that the threat of money laundering within the legal sector remains high, showing little movement since 2020, and solicitors must remain vigilant to this threat. For those providing TCSP services the change to Medium risk of terrorist financing will also be of note.

All solicitor firms should review the 2025 NRA and consider how its findings apply to their practice, the services that they provide and their client base and update their own firm-wide risk assessments and corresponding policies, controls and procedures as appropriate.

Brian Carson, Head of AML Policy, Law Society of Northern Ireland