- Publication Date
- 2022-12-09
The Solicitors Regulation Authority (SRA) conducted an audit of a law firm, leading to several findings and actions. The SRA's investigation revealed significant issues in the firm's compliance with Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017). These areas of concern extended to the lack of a compliant Anti-Money Laundering (AML) practice-wide risk assessment until November 2021, in defiance of the SRA’s warning notice issued in May 2019. Furthermore, the firm made an incorrect declaration in January 2020 about the compliance of its AML firm-wide risk assessment with Regulation 18 and relevant guidance.
The firm also failed to establish and maintain compliant AML policies, controls, and procedures. Until November 2021, the firm's policies did not adequately address the identification and scrutiny of complex and unusual transactions, those with no apparent economic or legal purpose, high-risk transactions, and necessary customer due diligence measures.
The firm admitted that up until November 2021, it failed to meet required AML legislation standards. Specifically, between June 2017 and November 2019, when the SRA Handbook 2011 was in force, the firm did not behave in a manner that maintained public trust in legal services. It also failed to comply with its legal and regulatory obligations and to manage its business effectively in terms of governance, financial, and risk management principles.
From November 2019 onwards, under the SRA Standards and Regulations, the firm also failed to act in a way that upheld public trust, comply with all regulatory arrangements, and keep itself updated with necessary regulatory and legislative requirements.
The relevant lawyer acknowledged the misconduct, which included recklessly failing to comply with statutory obligations imposed by money laundering regulations and SRA rules. This failure resulted in a medium-level impact since the firm's non-compliance could have facilitated dubious transactions with potential links to money laundering or terrorist financing.
The SRA concluded that a financial penalty was appropriate to maintain professional standards and uphold public confidence in legal services. Consequently, the firm agreed to pay a financial penalty of £2,000 and cover the SRA’s investigation costs of £600.