- Publication Date
- 2023-02-21
The Solicitors Regulation Authority (SRA) conducted a forensic investigation into the law firm as a result of intelligence received from an investigation into another firm. The investigation revealed concerns 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 practice-wide risk assessment, required by Regulation 18 of the MLRs 2017, until May 2022 and failed to consider the SRA’s warning notice on this subject issued in May 2019 and updated in November 2019. The MLRs 2017 outline five key risk areas that must be assessed: its customers, geographic areas of operation, the products or services provided, the delivery methods of these services, and its transactions. The firm did not fully assess any of these areas in a risk assessment. Furthermore, the firm lacked compliant AML policies, controls, and procedures (PCPs) as necessitated by Regulation 19 of the MLRs 2017 until May 2022.
The firm admitted, and the SRA accepted, that by failing to comply with money laundering legislation up to May 2022, the firm had several failings since starting operations in January 2019. These included failing to maintain public trust, comply with legal and regulatory obligations, carry out business effectively, and failing to establish adequate systems and controls.
The firm showed disregard for statutory and regulatory obligations, facilitating transactions that could potentially lead to money laundering. The firm did not financially benefit from the misconduct and cooperated with the SRA throughout the investigation. However, the public would expect a firm of solicitors to comply with its legal and regulatory obligations to prevent risks such as money laundering and terrorist financing.
A financial penalty was deemed appropriate by the SRA to maintain professional standards and uphold public confidence. The SRA determined the misconduct was low to medium in nature and medium in impact. The basic penalty was set towards the middle of the £1,001 to £5,000 bracket, at £2,000, and subsequently discounted by 25% for early admission and remedial actions, resulting in a final penalty of £1,500 .