- Publication Date
- 2022-11-23
The Solicitors Regulation Authority (SRA) conducted an investigation into the law firm, following a referral from their AML Proactive Supervision team, who conducted a desk-based review into the firm's AML compliance.
The investigation identified areas of concern in relation to compliance with Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017). The firm did not have in place a compliant AML practice-wide risk assessment, as required by Regulation 18 of the MLRs 2017, until August 2020 and therefore failed to have sufficient regard for the SRA’s warning notice issued in May 2019. The firm also incorrectly made a declaration to the SRA in March 2020 that its risk assessment was compliant, in line with the requirements of Regulation 18 and relevant guidance.
The law firm admits, and the SRA accepts, that by failing to comply with money laundering legislation, it failed to behave in a way that maintains the trust the public places in the firm and in the provision of legal services, failed to carry out business effectively and in accordance with proper governance and sound financial and risk management principles, failed to achieve effective systems and controls to comply with Principles and rules, and failed to comply with applicable legislation, including anti-money laundering and data protection legislation. From November 2019 until August 2020 when the firm became compliant, it failed to act in a way that upholds public trust and confidence in the solicitors' profession and failed to achieve Compliance and business systems ensuring effective governance structures.
The conduct showed a disregard for statutory and regulatory obligations and had the potential to cause harm by facilitating transactions that could have led to money laundering or terrorist financing. This could have been avoided had the firm established an adequate practice-wide risk assessment prior to August 2020, especially considering that over half of the firm’s fee income was from conveyancing, which is a high-risk area of work. Despite these issues, there has been no evidence of harm to consumers or third parties, and the firm did not financially benefit from the misconduct.
The law firm has assisted the SRA throughout the investigation, admitted the breaches, shown remorse for its actions, and remedied the breaches. The firm has continued to regularly update its practice-wide risk assessment and AML policies, controls, and procedures, showing a commitment to AML compliance moving forward.
In deciding the level of the financial penalty, reference is made to the guidance on the SRA’s Approach to Financial Penalties. The SRA considered the nature and impact of the misconduct, the mitigation offered by the firm, and determined that a financial penalty is appropriate. The firm agreed to pay a financial penalty of £1,000.
The law firm also agreed not to act in any way that is inconsistent with this agreement, such as by denying responsibility for the conduct referred to, which may result in further disciplinary sanctions.