- Publication Date
- 2024-05-10
In June 2017, the SRA proactive AML (anti-money laundering) team commenced an inspection of the law firm's AML compliance. This inspection identified various areas of concern surrounding the firm’s compliance with requirements for a documented AML firm-wide risk assessment (FWRA), its policies, controls, and procedures (PCPs), client and matter risk assessments, and AML training.
These concerns led to a referral to the SRA's AML investigation team. In April 2022, the law firm was provided with guidance to help it come into compliance. The law firm implemented a documented FWRA and a training policy in April 2022. It also took some steps to update its PCPs, but these require further improvement.
It was found that the law firm: - Between June 2017 and around April 2022, failed to have in place a documented assessment of the risks of money laundering and terrorist financing to which its business was subject (a FWRA) pursuant to Regulation 18 of the MLRs 2017. - Since June 2017, failed to establish and maintain adequate AML policies, controls, and procedures, to mitigate and effectively manage the risks of money laundering and terrorist financing pursuant to Regulation 19(1)(a) of the MLRs 2017, and regularly review and update them pursuant to Regulation 19(1)(b) of the MLRs 2017. - Failed to conduct client and matter risk assessments on eight client files, as required by Regulations 28(12)(a)(ii) and 28(13) of the MLRs 2017. - Failed to take appropriate measures to ensure that all relevant employees received AML training, as required by Regulation 24 of the MLRs 2017.
The firm was directed to pay a financial penalty of £8,964. This was because the firm's conduct was serious by reference to factors in the SRA Enforcement Strategy: 1. Its conduct was a breach of its regulatory obligations which persisted for longer than was reasonable. 2. For a significant period of time, the firm failed to have proper regard to the SRA's guidance and warning notices which explained what was required, the risks that failure to comply with AML requirements posed, and the regulatory consequences of failing to comply. 3. The firm was responsible for its own conduct, which was serious and had the potential to cause harm to the public interest and to public confidence in the legal profession.
In view of the above, the firm's conduct was placed in conduct band C which has a financial penalty of 1.6% to 3.2% of annual domestic turnover. Considering aggravating factors, the firm's conduct was placed at the higher end of band C at C4 (2.8% of annual domestic turnover).
The following mitigating factors were considered: - The firm made admissions. - The firm took some remedial action. - There was no evidence that actual harm had materialised.