- Publication Date
- 2024-03-01
In June 2017, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) came into force. Law firms that carry out certain work must comply with the MLRs 2017 by performing client/matter risk assessments to identify and assess risks of money laundering and terrorist financing.
In March 2023, the SRA's Anti-Money Laundering (AML) Proactive Team conducted a desk-based AML review at the law firm to assess its compliance with the MLRs 2017. It was discovered that five files assessed by the SRA lacked client/matter risk assessments. During the investigation that followed, the law firm admitted that it had not completed any client/matter risk assessments on its files prior to March 2023.
The investigation concluded that the law firm failed to perform client/matter risk assessments as required by Regulations 28(12) and 28(13) of the MLRs 2017 before March 2023. Consequently, the law firm’s conduct was found to be serious, based on the following factors in the SRA Enforcement Strategy:
- The breach of regulatory obligations persisted for an unreasonable duration, indicating a pattern of non-compliance.
- The law firm was responsible for its own conduct, which posed the potential for serious harm to the public interest and public confidence in the legal profession.
As a result, the law firm was directed to pay a penalty of £23,035.50 and ordered to pay costs of £1,350. The law firm's conduct was categorized in conduct band C, which has a financial penalty range of 1.6% to 3.2% of annual domestic turnover. However, since the law firm had not acted dishonestly or lacked integrity, there was no material harm caused, and it had proactively taken steps to comply with its AML obligations before the AML desk-based review. Thus, the penalty imposed was at the lower end of this range.
Mitigating factors considered in determining the fine included:
- The absence of significant harm caused by the failings.
- The law firm's admissions and cooperation with the SRA.
- The steps taken by the law firm to remedy the breaches.