- Publication Date
- 2023-09-29
The SRA conducted an investigation into the law firm following a proactive AML inspection. The investigation identified areas of concern regarding compliance with Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017), and other regulations.
The law firm did not have a compliant AML practice-wide risk assessment, as required by Regulation 18 of the MLRs 2017, until September 2022 and failed to adhere to the SRA’s warning notice issued in May 2019. Additionally, the firm incorrectly declared in January 2020 that its risk assessment was compliant, when it was not. The risk assessment failed to adequately consider clientele, geographical areas of operation, provided products or services, and transactions of the firm.
Furthermore, the firm lacked compliant AML policies, controls, and procedures (PCPs) required by Regulation 19 of the MLRs 2017, which are essential to mitigate and manage the risks of money laundering and terrorist financing. These AML policies, controls, and procedures were noncompliant until September 2022 and did not address critical areas including the scrutiny of complex or unusual large transactions, transactions with no apparent economic or legal purpose, and an unusual pattern of transactions, among others.
The firm admitted, and the SRA accepted, that it did not comply with money laundering legislation up to September 2022. The admission covered the periods during which the SRA Handbook 2011 and the SRA Standards and Regulations 2019 were in force.
The SRA considered the firm’s misconduct reckless because there was a failure to comply with statutory obligations imposed by money laundering regulations and the SRA’s rules. Although no clients were directly affected by the firm’s failure to have the proper risk assessment in place, the potential for harm existed. Consequently, the SRA assessed a financial penalty of £2,000, taking into account the seriousness of the misconduct and the absence of aggravating circumstances .