- Publication Date
- 2024-02-20
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 who carry out certain work must comply with the MLRs 2017. Those firms must carry out a risk assessment to identify and assess the business' risks of money laundering and terrorist financing (the AML firm-wide risk assessment).
In March 2022, the Anti-Money Laundering (AML) Proactive Team from the Solicitors Regulation Authority (SRA) undertook a desk-based AML review at the law firm to assess its compliance against the MLRs 2017. The law firm had been undertaking in-scope work since 2010.
It was found that the law firm did not have a compliant AML firm-wide risk assessment (FWRA) or policies, controls, and procedures (PCPs) in place. It also found that four in-scope files had no client/matter risk assessments.
The law firm had completed an online declaration in January 2020 to say that it was compliant with the MLRs 2017. This form had been completed by the law firm’s compliance officer for legal practice (COLP) in the mistaken belief that it was compliant when it was not.
The law firm provided a fully compliant FWRA in April 2023 and fully compliant PCPs to the SRA in May 2023.
It was found that the law firm failed to have in place between June 2017 and April 2023 any AML firm-wide risk assessment. It also lacked compliant policies, controls, and procedures (PCPs) between June 2017 and May 2023. Additionally, the law firm failed to conduct client/matter risk assessments on four files. On January 2020, it provided the SRA with inaccurate information by making a declaration that its firm-wide risk assessment was compliant with the requirements of the MLRs 2017, when none was in place.
The SRA decided to direct the law firm to pay a penalty of £16,052.80. This decision was made because the law firm’s conduct was serious.
The law firm’s conduct was below the required regulatory standards, persisted for longer than reasonable, demonstrated a pattern of non-compliance, and was deemed reckless. The law firm failed to have proper regard for the SRA’s guidance and warning notices, which detailed the requirements, risks associated with failing to comply with Anti-Money Laundering (AML) regulations, and the regulatory consequences of non-compliance. The law firm's actions had the potential to cause serious harm to the public interest and public confidence in the legal profession, thereby resulting in a significant penalty.
The following mitigating factors were considered: - No significant harm was caused by the law firm’s failings. - The law firm made admissions. - The law firm cooperated with the SRA. - The law firm remedied the breaches.