- Publication Date
- 2023-11-02
The Solicitors Regulation Authority (SRA) conducted an investigation into the law firm following a desk-based review by the SRA's Anti-Money Laundering (AML) Proactive Supervision team. This review identified areas of concern regarding the firm's compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017).
The firm did not have a compliant AML firm-wide risk assessment (FWRA) from June 2017 to April 2023, as required by Regulation 18 of the MLRs 2017. The FWRA, which is supposed to include the firm’s assessment of risks in five key areas, was not put in place until November 2022. Further, the document was not compliant as it did not cover the five areas in sufficient detail, and several columns within the FWRA had been left blank. An updated FWRA was provided to the SRA in April 2023, which is compliant with the MLRs 2017.
In response to the SRA's risk assessment declaration exercise, the firm provided inaccurate information in January 2020, claiming that the FWRA was compliant with Regulation 18 when, in fact, no FWRA was in place.
The firm also failed to have compliant AML policies, controls, and procedures (PCPs) from June 2017 to April 2023, breaching Regulation 19 of the MLRs 2017, which mandates the establishment and maintenance of PCPs to mitigate effectively the risks of money laundering and terrorist financing. These procedures were not put into place until November 2022, and were initially non-compliant as they did not cover multiple mandatory areas set out in the regulations. Updated PCPs were provided to the SRA in April 2023.
Until November 2022, the firm failed to implement client/matter risk assessments (CMRA), breaching Regulation 28(12)(a)(ii) and Regulation 28(13) of the MLRs 2017. Effective client and matter risk assessments help ensure compliance, deter fraud, identify potential risks, and provide valuable insights into the firm’s client base and activities. Detailed CMRA processes and forms that comply with the MLRs 2017 were submitted to the SRA in April 2023.
In two cases reviewed by an AML Officer during the desk-based review, the firm failed to obtain and maintain a record of identification documents, thereby not meeting the requirements of Regulation 28(2) of the MLRs 2017.
The firm admits that by failing to comply with the MLRs 2017 from June 2017 to November 2019, and from November 2019 until at least November 2022, it was in breach of its regulatory obligations. The firm acknowledges its failure to establish adequate AML documentation and controls, thus potentially enabling dubious transactions that could have led to money laundering or terrorist financing .