UK AML 2026: EDD, Trusts, and Sterling Thresholds

Andre Grayson 2

Welcome back to Compliance Pods for Legal Professionals, and just a reminder that the content of this podcast is for general information purposes only and does not constitute legal advice. So Buckle up. Because Here. We. Go.

Andre Grayson 2

So, uh, the Money Laundering and Terrorist Financing (Amendment) Regulations came into force on 30 June 2026, and I- I still don't think half the firms we talk to realize their written policies are now out of date. It's not a complete, top-to-bottom rewrite, but Regulation 33, it-it-it does something really interesting with Enhanced Due Diligence. EDD. It narrows the trigger.

Paul Crowther

So June 30th? That's, uh, that's already come and gone. What- what actually changed with the trigger? .

Andre Grayson 2

Well, previously, the wording was broad. Any transaction that was, quote, "complex" or unusually large. Now, the 2026 amendments have- they've changed that "or" to an "and" in a way. It's now "unusually" complex or "unusually" large. So, just being complex isn't enough to force your hand into mandatory EDD anymore. It has to be unusually complex for "your" specific practice.

Paul Crowther

Hold on, "unusually complex"? That is a behavioral shift. Because if you're a high-volume commercial property firm, or, say, doing multi-party corporate deals... complexity is literally your every day. It's routine. So you're telling me they can skip EDD paperwork because it's their version of normal?

Andre Grayson 2

Exactly! If a three-tier offshore structure is standard for your typical real estate fund client, it's not "unusual" for you. You don't have to trigger the full, EDD automatically. But—and this is a massive "but," Paul—you can't just say "oh, it's normal for us". You have to write down the risk rationale.

Paul Crowther

Ah, faire enough, a"risk rationale".

Andre Grayson 2

yes, the SRA want to see the "why." If you didn't do EDD on a five-million-pound deal with three offshore layers, you'd better have a documented record explaining exactly why that is routine for your firm.

Paul Crowther

Right. So it's- it's a trade-off. Less mandatory grunt work, but a much higher bar for... well, for thinking. You actually have to use your brain and write it down. Speaking of- of, you know, easing the burden, what's this I heard about pooled client accounts? Regulation 37?

Andre Grayson 2

Yes, so, Pooled Client Accounts—PCAs. The 2026 amendments allow banks to apply simplified due diligence to these accounts, but only if the law firm is fully subject to the MLRs, represents low risk, and can pull up the underlying client identity data upon request. It's- it's trying to align the bank's rules with our accounts rules, but they are not identical. You still need explicit ML/TF risk documentation for that pooled account. You can't just point to a clean audit from your accountant and say "we're good."

Paul Crowther

Okay, so pooled accounts got a bit of a clean-up, but I'm sensing a- a "however" coming. What's the- what's the nasty surprise in these 2026 rules? Because there's always one.

Andre Grayson 2

The trust register. The TRS. This is a quiet little bomb. Previously, there was an exemption, for non-UK express trusts with no UK trustees that acquired UK property... but only if they acquired it before October 6, 2020. The 2026 amendments have completely deleted that exemption. Gone.

Paul Crowther

So property bought before October 2020... if it's held by a non-UK trust with no UK trustees... they now have to register with the Trust Registration Service? Even though they were exempt for the last six years?

Andre Grayson 2

Yep. They are fully in scope now. And as the "relevant person"—the solicitor handling the transaction or the ongoing business—you have to verify their TRS registration certificate. If there's a material discrepancy between what's on the certificate and what you find during your due diligence, you have exactly 30 days to report it to HMRC, or... well, you have to cease the business relationship. You have to walk away.

Paul Crowther

Thirty days? That is- quick, Andre. If you're waiting on a client to hunt down some old trust deed from 2018, that month is going to evaporate. Firms need to be auditing their existing trust clients right now, surely, rather than waiting for a transaction to trigger it.

Andre Grayson 2

Exactly. Don't wait for a client query. Check your archives. And while you're in there cleaning house, there's another tiny, incredibly annoying administrative trap. The Euro-to-Sterling sweep.

Paul Crowther

The what? The Euro sweep?

Andre Grayson 2

Yes. Historically, a lot of the monetary thresholds in the Money Laundering Regulations were written in Euros—like the old ten-thousand-Euro limit for high-value dealers, or various client risk thresholds. The 2026 amendments have officially converted all of those to Pound Sterling. So if your firm's written AML policies, or your training slides, or even your case management software still has rules triggered by "Euro" amounts... you are technically non-compliant. It all has to be Sterling now.

Paul Crowther

Huh. That sounds minor, but it's exactly the kind of silly thing a regulator prints out and flags during an audit to show you haven't updated your manual since June 30th. It's a- a compliance tripwire.

Andre Grayson 2

It really is. And looking ahead, these minor tweaks—the currency conversions, the TRS updates, the risk rationales—they're really just a dry run. The landscape is shifting. By 2027, we're expecting the FCA, the Financial Conduct Authority, to take over AML supervision for the legal sector. They are much more data-driven, much more audit-heavy than what firms are used to now.

Paul Crowther

Oh, man. The FCA coming in is... that's a whole different league. It reminds me of hang-gliding, actually. You- you don't start adjusting your leg straps or checking your carabiners when you're already flying at two thousand feet. You do the checks on the ground, before you run off the cliff. These 2026 amendments are the ground check. If a firm can't get their Euro thresholds or their risk rationales written down properly now, they're going to absolutely plummet when the FCA starts pulling their data in 2027.

Andre Grayson 2

Tortured metaphor, Paul, but correct. Get the rigging tight now, while we're still on the launchpad. Well, uh, that's probably a good place to leave it. I need to go check our own templates for any lingering Euros.

Paul Crowther

Sounds good. Let's get to it. So, from all at Legal Compliance Support:, stay compliant, Stay safe and we’ll catch you next time!