If your firm’s anti-money laundering compliance only gets serious attention once a year, you’ve got a problem.
According to compliance experts, treating AML as an annual tick-box exercise rather than an ongoing process has become one of the clearest warning signs that a firm is heading for regulatory trouble.
Moving Beyond Annual Reviews
The shift from periodic checks to continuous monitoring represents perhaps the most significant change in how regulators expect firms to approach AML compliance. Automated systems that check daily against global databases for Politically Exposed Persons and sanctions lists are no longer a luxury reserved for large practices. They’re rapidly becoming the baseline expectation.
Email reminders and calendar alerts for annual client reviews simply don’t cut it anymore. When a client’s status changes, whether through a new PEP designation or a sanctions listing, firms need to know immediately, not months later during an annual refresh.
The Integration Imperative
Effective automation cannot exist without proper system integration. Too many firms still manage client data across fragmented spreadsheets, creating inconsistent records and chaotic version control. The result is manual data entry errors that undermine the entire compliance process.
Modern AML systems should draw client information directly from existing tax or practice management software. Dates of birth, passport details, and other verification data need to flow seamlessly into compliance tools without manual intervention.
This isn’t just about saving time; it’s about eliminating the human error that creates compliance gaps and exposes firms to regulatory action.
Governance Foundations Matter More Than Software
Technology alone won’t solve weak compliance foundations. Firms investing in sophisticated AML software whilst relying on generic, off-the-shelf Policies, Controls, and Procedures documents are building on sand. These frameworks must reflect the specific risks, client base, and service offerings of your particular practice.
The role of the Money Laundering Reporting Officer demands specific attention. MLROs require additional training beyond what the general staff receive because they need to spot compliance gaps that others might miss. Regulators increasingly scrutinise whether MLROs have the knowledge and authority to fulfil their statutory responsibilities effectively. A well-intentioned appointment without proper training and empowerment creates liability rather than protection.
New Regulatory Pressures on the Horizon
The Economic Crime and Corporate Transparency Act has introduced mandatory identity verification requirements for company directors and persons with significant control. Starting 18 November 2025, firms will need to verify these individuals’ identities, and regulators are pushing practitioners toward biometric technology rather than accepting easily falsified documentary evidence.
This represents a material shift in what constitutes adequate verification. Traditional approaches relying on checking passport copies and utility bills face growing scrutiny. Biometric validation provides a higher degree of certainty and aligns with regulatory expectations around robust identity confirmation in an era of sophisticated fraud.
The Proportionality Debate
Not everyone in the profession accepts these escalating requirements without question. Some practitioners point to striking economic data: AML compliance costs the UK economy an estimated £34 billion to £38.3 billion annually, whilst the amount of criminal assets actually denied or recovered sits at a fraction of that figure. The compliance burden exceeds recoveries by a factor of over sixty.
This proportionality concern reflects genuine frustration within the profession. Firms see mounting costs, expanding obligations, and limited evidence that the current approach delivers value commensurate with its expense. However, regardless of these debates about policy effectiveness, the legal obligations remain firmly in place, and enforcement continues to intensify.
What This Means for Your Firm
Firms cannot afford to wait for perfect regulatory clarity before addressing these gaps. The shift from annual reviews to ongoing monitoring needs to happen now, not when enforcement action forces the issue. System integration projects require prioritisation, and generic compliance templates need to be replaced with frameworks tailored to your actual practice risks.
The MLRO role demands proper investment in training and authority, not just a title assigned by default. Meanwhile, current identity verification processes need to be evaluated against emerging biometric expectations.
The economic burden is real, and proportionality concerns are legitimate. But compliance failures carry consequences beyond financial penalties, extending to reputational damage and operational disruption that can fundamentally threaten a practice’s viability.
