- Publication Date
- 2022-06-24
The Solicitors Regulation Authority (SRA) conducted an investigation into the law firm. The investigation identified areas of concern in relation to compliance with Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017).
The law firm did not have in place a compliant Anti-Money Laundering (AML) practice-wide (firm-wide) risk assessment, as required by Regulation 18 of the MLRs 2017, until February 2022. The firm incorrectly made a declaration to the SRA in January 2020 that its risk assessment was compliant, in line with the requirements of Regulation 18 and relevant guidance. The risk assessment in place failed to consider the firm’s delivery channels and transactions as required by the MLR 2017.
The law firm did not have compliant AML policies, controls, and procedures (PCPs) as required by Regulation 19 of the MLRs 2017. These AML policies, controls, and procedures are vital to mitigate and manage effectively the risks of money laundering and terrorist financing. The firm's PCPs were not compliant until February 2022 due to several factors, including lacking accurate information, completely omitted information, out-of-date guidance and links, references to an employee no longer with the firm, references to incorrect and superseded money laundering regulations, and lacking source of funds information.
The law firm failed to take appropriate measures to ensure relevant employees were made aware of the law relating to money laundering and terrorist financing and were regularly given training as required by Regulation 24 of the MLRs 2017. Moreover, employees had a non-compliant and out-of-date AML policy to refer to for any training needs.
In one instance, the law firm failed to conduct adequate ongoing monitoring and scrutinize the transaction, including necessary source of funds checks, as required by Regulation 28(11)(a) of the MLRs 2017, when £115,000 was received into the firm’s client account and returned to the sender following an aborted transaction.
The SRA noted that the law firm failed to have sufficient regard for the SRA’s warning notice on money laundering and terrorist financing. This warning notice, updated in March 2018 and November 2019, lists warning signs related to source of funds, large cash payments, and transactions with unusual features such as unexplained urgency. The law firm failed to identify several of these warning signs.
Further, the law firm failed to conduct an assessment of the level of risk arising in the transaction and did not have a client/matter risk assessment in place, as required by Regulation 28(12)(a)(ii) of the MLRs 2017. Consequently, the firm was unable to demonstrate to the SRA the extent of the measures it had taken concerning the risks of money laundering and terrorist financing, as required by Regulation 28(16) of the MLRs 2017.
The law firm admitted, and the SRA accepted, that by failing to comply with relevant money laundering legislation, the firm had several breaches.
From November 2019 to February 2022, the firm:
- Failed to act in a way that upholds public trust and confidence in the solicitors' profession and in legal services provided by authorized persons.
- Failed to comply with all the SRA’s regulatory arrangements, as well as with other regulatory and legislative requirements.
The firm agrees to pay a financial penalty of £2,000 and to the publication of this agreement.