- Publication Date
- 2023-08-01
The Solicitors Regulation Authority (SRA) conducted an investigation into the law firm following a proactive anti-money laundering (AML) inspection. This investigation identified areas of concern relating to the firm's compliance with various regulatory requirements, including the Money Laundering, Terrorist Financing Regulations 2017.
The investigation revealed that the firm failed to implement a practice-wide (firm-wide) risk assessment, as required by regulation, until March 2021. It was also found that the firm incorrectly declared in February 2020 that it had a compliant risk assessment in place when it did not. The necessary documented risk assessment was missing, and several key risk areas were not evaluated. These areas included:
- The firm's customers
- The geographic areas in which the firm operates
- The products or services provided by the firm
- The delivery methods of the firm's products and services
- The firm's transactions
The SRA highlighted that conveyancing and controlling client money, which constitutes a significant portion of the firm's work, should have been addressed in the risk assessment. Given that conveyancing is a high-risk area, the firm was expected to consider relevant risk assessments and guidance.
The firm admitted to failing to comply with money laundering legislation up to March 2021. From June 2017 to November 2019, the firm failed to maintain public trust in the legal services it provided, adhere to effective governance and risk management principles, achieve specific outcomes of the SRA Code of Conduct 2011, and comply with relevant legislation. From November 2019 to March 2021, additional breaches were noted, including failing to uphold public trust, comply with SRA regulatory arrangements, and stay updated with applicable laws and regulations.
The SRA's findings indicated that the firm's lack of compliance demonstrated an AML control environment failure. Nonetheless, the firm assisted the SRA throughout the investigation, admitted the breaches, expressed remorse, did not financially benefit from the misconduct, and has shown a lower risk of repetition.
Following the SRA's three-step fining process, several conclusions were drawn:
- The nature of the misconduct was considered high, as the firm continued operations for a significant period knowing compliance was inadequate.
- The harm or risk of harm was considered low due to the absence of evidence indicating direct client impact.
- The overall seriousness of the firm's conduct warranted a financial penalty.
These findings led to the decision that a financial penalty of £2,000 was appropriate, with the measure intended to act as a deterrent to other firms and emphasize the importance of adhering to AML regulations.
Additionally, the firm agreed to pay the costs of the investigation amounting to £600.
This agreed outcome underscores the critical importance of AML compliance within legal practices and serves as a reminder to the legal sector about the severe consequences of regulatory failures related to money laundering risks.