- Publication Date
- 2024-05-09
The Solicitors Regulation Authority (SRA) conducted an investigation into the law firm following an inspection by the SRA's AML Proactive Supervision team. This inspection identified several areas of concern regarding the firm's compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017).
During the inspection, it was found that between June 2017 and November 2022, the law firm did not have the required AML policies, controls, and procedures (PCPs) in place as mandated by Regulation 19 of the MLRs 2017. Following the inspection, the law firm was urged to implement these PCPs without delay. Subsequently, the firm adopted these AML PCPs in November 2022, meeting the requirements of Regulation 19.
Additionally, the SRA found that between June 2017 and November 2022, the law firm failed to conduct adequate client and matter risk assessments (CMRA) as required by Regulations 28(12)(a)(ii) and 28(13) of the MLRs 2017. Based on the inspection, it was discovered that clients and matters were not being adequately risk-assessed, as no documented client and matter risk assessments were found on the reviewed files. On January 2024, the law firm presented documents indicating the implementation of a new client and matter risk assessment process in November 2022, compliant with Regulation 28 of the MLRs 2017.
The firm admitted to these failures to comply with the MLRs 2017, both from June 2017 to November 2019 when the SRA Handbook 2011 was in force and thereafter.
In considering the appropriate sanctions, the SRA took into account the firm's admissions and several mitigating factors, including the firm's prompt actions to rectify the inadequacies, cooperation with the SRA’s AML Proactive and Investigations teams, lack of evidence of harm to consumers or third parties, and no financial benefit gained from the misconduct. The SRA determined that a fine was the appropriate outcome due to the conduct that showed a disregard for statutory and regulatory obligations, which had the potential to cause harm by facilitating questionable transactions that could have led to money laundering or terrorist financing.
The amount of the fine was calculated according to the SRA’s published guidance on setting financial penalties. Given the seriousness of the misconduct and its impact, a basic penalty was determined, which was then reduced in consideration of the mitigating factors. The final fine was set at £5,224 .