- Publication Date
- 2023-11-16
The Solicitors Regulation Authority (SRA) conducted an audit of the law firm's compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR). The SRA found that from June 2017 to February 2023, the law firm at various times breached these regulations, did not pay sufficient regard to the SRA’s warning notice on AML firm-wide risk assessments, and failed to provide the SRA with accurate information when asked to do so. The law firm has accepted these failings and agreed to the financial penalty and costs order.
The SRA's investigation revealed several key issues: - The law firm failed to have a fully compliant AML firm-wide risk assessment as required by Regulations 18(1) and 18(4) of the MLR. - The law firm did not sufficiently regard the SRA’s warning notice on AML firm-wide risk assessments dated May 2019 (updated November 2019). - The law firm provided inaccurate information to the SRA in January 2020 by declaring that its AML firm-wide risk assessment was compliant with Regulation 18 MLR when it was not.
Furthermore, the law firm failed to document client/matter risk assessments as required by Regulation 28(12) MLR, carry out adequate customer due diligence (CDD) including source of funds (SoF) checks as required by Regulation 28 MLR, and perform enhanced due diligence (EDD) as required by Regulation 33 MLR.
The SRA concluded that these failings had serious implications given the risks associated with money laundering and the vulnerability of conveyancing to criminal abuse. Despite 55% of the law firm’s work being conveyancing, there was no evidence that the misconduct caused harm. The law firm’s conduct was categorized within penalty bracket C, which specifies a financial penalty band of between 1.6% and 3.2% of the law firm’s annual turnover. The penalty was set at the lower end of this range due to the absence of evidence showing harm directly caused by the misconduct, lack of aggravating factors, and the law firm's lack of financial benefit from the misconduct.
Ultimately, the law firm was directed to pay a financial penalty of £3,800 and was also ordered to pay costs of £1,350.