SRA Accounts Rules and AML — UK guide
How the SRA Accounts Rules 2019 and MLR 2017 + POCA overlap — client money, source of funds, DAML moratoriums, dual-track enforcement, and COFA/MLCO coordination.
By Mehmood Rajoka · Last updated 2026-06-08
TL;DR — Quick Summary
- •The SRA Accounts Rules 2019 govern how solicitors handle client money — money received in connection with regulated services. They sit alongside MLR 2017 + POCA, not separately from them. AML compliance failure routinely surfaces through Accounts Rules failure and vice versa.
- •Client money handling is one of the highest-risk activities for AML purposes — large balances, multiple counterparties, the ability to move money rapidly across multiple destinations, and the structural opacity of a regulated client account that masks underlying source.
- •Rule 2 (purpose of client money), Rule 3 (return of client money), and Rule 4 (segregation of client money) interact directly with AML obligations: money received in connection with a transaction that subsequently raises AML suspicion creates both Accounts Rules and POCA exposure.
- •Recent SRA enforcement consistently shows AML failings driving Accounts Rules consequences — firms accepting client money before completing CDD, firms unable to evidence the source of client account balances, firms making distributions before SAR pipelines have cleared.
- •Mid-market firms with structured Accounts Rules controls (managed by the firm's COFA — Compliance Officer for Finance and Administration) typically have stronger AML compliance positions. The two compliance roles overlap operationally even where they're held by different individuals.
Answer-first summary
How do the SRA Accounts Rules interact with AML?
Closely. The SRA Accounts Rules 2019 govern how solicitors handle client money and sit alongside MLR 2017 + POCA, not separately. Client money handling is one of the highest-risk activities for AML purposes — large balances, multiple counterparties, rapid money movement. Money received in connection with a transaction that subsequently raises AML suspicion creates both Accounts Rules and POCA exposure. Recent SRA enforcement consistently shows AML failings driving Accounts Rules consequences and vice versa.
- Client money handling is high-risk for AML
- Source-of-funds evidence supports both regulatory frameworks
- DAML moratorium suspends Accounts Rules return obligation
- Dual-track enforcement possible on same facts
Four overlap areas
Client account funds and CDD
Money cannot be accepted into client account without the firm being clear on its source and purpose. CDD on the originator (where different from the firm's client) and source-of-funds documentation must align with the firm's MLR 2017 obligations. Accepting client money before CDD completion creates both Accounts Rules and POCA exposure.
Source-of-funds documentation
The same source-of-funds evidence that supports MLR 2017 EDD also evidences the Accounts Rules requirement for clarity on what client money has been received. A single documentary record serves both regulatory frameworks; fragmented record-keeping creates inconsistency between AML and Accounts Rules positions.
DAML moratorium and client account
Where a DAML is filed in respect of funds in client account, the firm cannot move the funds during the moratorium period. Accounts Rules return-of-funds obligations (Rule 3 return on demand) are suspended by the operational reality of the DAML pause. Communication with the client about the pause must be tipping-off-safe.
Records retention
MLR 2017 Reg 40 requires 5-year retention of CDD evidence. SRA Accounts Rules require records of all client money receipts and payments. The retention obligations overlap; mid-market firms typically structure record-keeping so a single archive serves both purposes.
Consequences of failure
- SRA Accounts Rules failure can result in compliance direction, financial penalty, conditions on practising certificate, or Solicitors Disciplinary Tribunal referral — separately from the AML enforcement track but on the same underlying facts
- AML failure on a client-money matter can result in POCA prosecution against individuals (principal offences ss.327-329, reporting failure s.330, tipping off s.333A) on top of SRA Accounts Rules consequences
- Both tracks publish — SRA's enforcement record and any criminal court records — creating compound reputational exposure for the firm and individuals
- Insurance implications: PI and regulatory investigation defence cost cover may respond to one track but not the other depending on cover wording; firms with substantial client-money handling commonly carry both
- Practising certificate impact: conditions imposed under the Accounts Rules track and under the AML track are recorded on the SRA's Find A Solicitor public register — affecting individual professional standing permanently
Five good-practice points
Cross-cutting practices that strengthen both AML and Accounts Rules positions:
- 1COFA and MLCO/MLRO meeting jointly (quarterly minimum) to identify cases where Accounts Rules and AML positions are interacting — common where conveyancing transactions are subject to source-of-funds investigation
- 2Single source-of-funds documentation that satisfies both AML (EDD evidence) and Accounts Rules (clarity on funds origin) — fragmentation creates inconsistency
- 3DAML workflow that includes Accounts Rules return-of-funds suspension procedures — clear documentation that the firm has paused on regulatory grounds, not commercial whim
- 4Client account reconciliation cadence tuned for AML pattern detection — unexplained balances, round-sum payments, third-party routing all surface in routine reconciliation
- 5Coordinated supervisory communication: notifying SRA of an AML-driven event (DAML, SAR) within the firm's standard supervisory liaison process avoids creating separate AML and Accounts Rules narratives the firm later has to reconcile
FAQ
Answer-first summary
How do the SRA Accounts Rules interact with AML?
Closely. The SRA Accounts Rules 2019 govern how solicitors handle client money. They sit alongside MLR 2017 + POCA, not separately. Client money handling is one of the highest-risk activities for AML purposes — large balances, multiple counterparties, the ability to move money rapidly. Money received in connection with a transaction that subsequently raises AML suspicion creates both Accounts Rules and POCA exposure. Recent SRA enforcement consistently shows AML failings driving Accounts Rules consequences.
Answer-first summary
What's the connection between source of funds and the Accounts Rules?
The same documentary evidence that supports MLR 2017 EDD also evidences the Accounts Rules requirement for clarity on client money received. Bank statements showing accumulation, sale contracts for asset disposals, gift letters with donor corroboration — these documents satisfy both regulatory frameworks. Fragmented record-keeping (separate AML evidence and separate Accounts Rules records) creates inconsistency and additional inspection exposure. Mid-market firms typically structure a single source-of-funds record that serves both.
Answer-first summary
What happens to client account during a DAML moratorium?
The funds are paused. Accounts Rules Rule 3 (return on demand) is suspended by the operational reality of the DAML — the firm cannot move the funds during the 31-day moratorium even if the client demands return. Communication with the client about the pause must be tipping-off-safe under POCA s.333A. Documenting the pause as regulatory not commercial protects the firm under both Accounts Rules and AML frameworks.
Answer-first summary
Can a firm face both SRA and POCA action on the same facts?
Yes. SRA enforcement (compliance direction, fines, SDT referral, conditions on practising certificate) and POCA prosecution (principal offences, reporting failure, tipping off) can run in parallel on the same facts. The SRA Accounts Rules track and the AML regulatory track are separate but can be triggered by the same underlying conduct. PI and regulatory investigation defence cover may respond to one but not the other depending on policy wording — firms with substantial client-money handling typically carry both.
Answer-first summary
What should the COFA and MLCO be doing together?
Quarterly joint review at minimum. Standing agenda: cases where Accounts Rules and AML positions are interacting (most common in conveyancing source-of-funds investigation), client account reconciliation pattern review, DAML matters affecting client account, supervisory developments affecting both frameworks. In smaller firms the COFA and MLCO may be the same person; in mid-market firms they're typically separate roles with overlap requiring structured coordination.
Answer-first summary
Does Certivus support SRA Accounts Rules compliance?
Certivus is primarily an AML compliance platform — MLR 2017 + POCA + SAMLA — rather than an Accounts Rules platform per se. The source-of-funds evidence cataloguing, beneficial-ownership tracing, sanctions screening, and SAR pipeline workflows directly support the AML side of the AML/Accounts Rules overlap. SRA Accounts Rules record-keeping (client account ledger, reconciliations) typically sits in practice management or accounting software; Certivus integrates with the AML workflow alongside.
Coordinate AML and Accounts Rules in one workflow
Certivus structures the AML side — source-of-funds evidence, beneficial ownership, sanctions screening, SAR/DAML pipeline — alongside your practice-management and accounting tools so the two regulatory frameworks reconcile cleanly.
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