- Publication Date
- 2024-03-05
The SRA's Anti-Money Laundering (AML) Proactive Team conducted an inspection at the law firm in March 2022 to assess compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs 2017). The inspection identified various areas of concern regarding the firm's compliance with requirements for a documented and compliant AML firm-wide risk assessment (FWRA), policies, controls, and procedures (PCPs), and client/matter risk assessments.
These concerns led to a referral to the SRA's AML investigation team. In July 2022, the law firm was provided with guidance to help it come into compliance. Consequently, a compliant AML firm-wide risk assessment (FWRA) was implemented in September 2022, and compliant policies, controls, and procedures (PCPs) were put in place by April 2023.
It was found that: a. Between June 2017 and March 2022, the law firm failed to have a documented assessment of the risks of money laundering and terrorist financing to which its business was subject (a AML firm-wide risk assessment (FWRA)). b. Between March 2022 and September 2022, the law firm failed to have an adequate FWRA. c. Between June 2017 and April 2023, the law firm failed to have fully compliant AML policies, controls, and procedures (PCPs). d. Between June 2017 and April 2023, the law firm failed to regularly review and update its AML policies, controls, and procedures and failed to have measures in place to monitor and manage compliance with them.
On five sampled files, the law firm did not carry out client and matter risk assessments as required by the MLRs 2017.
The law firm was directed to pay a financial penalty of £12,989.68. The firm's conduct was considered serious based on the following factors: 1. The conduct was a breach of regulatory obligations that persisted for longer than reasonable, showing a pattern of non-compliance. 2. The law firm failed to properly regard the SRA's guidance and warning notices for a significant period. 3. The firm’s conduct had the potential to harm the public interest and confidence in the legal profession, especially given the high proportion of the firm's work that fell under the MLRs 2017.
Mitigating factors included the law firm's cooperation with the SRA, remediation of the breaches, and the absence of evidence that actual harm had materialized.