Marking a client as high risk only helps if it changes what happens next. The file still needs the right evidence, an accountable approval decision and a plan for reviewing the relationship.

That distinction sits at the centre of the Solicitors Regulation Authority’s settlement with Leadenhall Law Group. The firm agreed to a £16,092 fine and £600 in investigation costs. The agreement was dated 24 July 2026 and published on 27 July, before Legal Futures covered it on 7 September. SRA settlement; Legal Futures report.

The firm acted for a non-domestic politically exposed person, or PEP, and associated companies across 14 residential property purchases between March 2017 and January 2020. The SRA found inadequate systems for identifying the PEP and establishing source of funds and wealth. Although the firm recognised the client as high risk, it did not adequately carry out the required actions. Its co-operation and work to bring itself into compliance reduced the penalty. SRA settlement, sections 2–5.

For investment services teams, the operational lesson is relevant well beyond conveyancing: a risk classification needs to lead to specific work. The examples below apply that lesson to investor onboarding; they are not additional findings about Leadenhall.

1. Establish who the PEP is and how they relate to the investor

A screening result is the beginning of an assessment. Reviewers need to establish whether the match is correct, which public function creates the exposure and how the individual relates to the client or beneficial owner being assessed.

Consider a family office investing through an SPV. Screening the SPV’s legal name gives the reviewer only part of the picture. The ownership record should make the individuals behind it visible, with supporting information that allows potential matches to be resolved.

For each confirmed match, record the relevant role, jurisdiction, supporting source and relationship to the investing entity. If the person is a family member or known close associate of a PEP, record that relationship accurately. Avoid collapsing different relationships into an unexplained label.

This is also where reducing false positives in PEP and sanctions screening matters. Reviewers need enough contextual information to distinguish the investor’s beneficial owner from another person with a similar name, and to explain the decision afterwards.

2. Give source of wealth and source of funds separate answers

Source of wealth explains how someone accumulated their overall wealth. Source of funds explains the origin of the money used for the particular transaction. The SRA’s thematic review treats them as distinct enquiries and cautions against assuming money is legitimate simply because it comes from a UK bank account. SRA source of funds and wealth review.

Take a hypothetical investor who says their wealth came from selling a business, while the proposed subscription will be funded by a dividend from a holding company. The reviewer has two connected explanations to assess: the business sale and the origin of the subscription money.

An evidence request should follow those explanations. Depending on the circumstances and assessed risk, useful material might include evidence of the sale, the investor’s entitlement to the proceeds, the dividend decision and the relevant movement of funds. The aim is a coherent account that the evidence supports.

Write down what each document establishes. A statement showing an available balance may answer whether money is present while leaving its underlying origin unresolved. Equally, requesting the same documents repeatedly adds friction without necessarily answering the outstanding question.

A practical file review should therefore ask which parts of the explanation have been supported, which remain uncertain and why the evidence collected is sufficient for this relationship.

3. Make approval and monitoring visible in the workflow

The UK PEP framework requires senior management approval, adequate measures to establish source of wealth and funds, and enhanced ongoing monitoring. The FCA’s updated guidance also clarifies that the MLRO need not personally approve each relationship where a suitably senior person does so and the MLRO retains oversight of the process. FCA PEP guidance, FG25/3.

Operationally, the approver should receive a decision-ready file: the confirmed exposure, the ownership context, the evidence assessed and any unresolved issues. Record the approval, its rationale and any conditions in a place the people administering the relationship can find.

For a fund-of-funds investor or a family office using several vehicles, make the scope of that decision clear. A colleague should be able to tell which entity and relationship were approved, and whether a subsequent instruction changes the facts on which approval relied.

Monitoring needs similar clarity. Assign responsibility for reviewing relevant changes, recording their significance and escalating where necessary. A new public role, a change in ownership or a materially different funding explanation can provide useful scenarios for testing the workflow.

Try handing an approved file to a colleague who did not onboard the investor. Can they identify the basis of approval and explain what would prompt another review without searching through separate email chains?

4. Keep enhanced checks proportionate

PEP status does not establish wrongdoing. The FCA expects a proportionate, risk-based approach. Under the UK framework, domestic PEPs start from a lower level of risk than foreign PEPs, unless other risk factors are apparent; the enhanced measures should reflect that distinction. The Leadenhall case concerned a non-domestic PEP. FCA guidance; SRA settlement.

That leaves room for a focused client experience. Explain what needs to be established, request evidence that answers it and record why the resulting checks fit the risk. A process can be thorough without treating every investor as if their circumstances were identical.

At Steward, our AI-first approach brings investor onboarding, screening, document review and case management into the same workflow, with human oversight. Keeping evidence and decisions together helps investment services teams make the progression from identification to review visible.

A useful PEP file should tell a complete story: who the person is, how their wealth and transaction funds have been assessed, who approved the relationship and how it will be monitored. The risk label is where that story starts.