- Publication Date
- 2024-03-12
The Solicitors Regulation Authority (SRA) conducted an investigation into the law firm following an inspection by its AML Proactive Supervision team. The inspection revealed areas of concern regarding the firm's compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017). Specifically, the investigation found that the firm did not have a documented AML firm-wide risk assessment (FWRA) between June 2017 and around December 2022. Furthermore, between December 2022 and May 2023, the firm failed to have an adequate FWRA in place.
The firm is required to have a FWRA that includes an assessment of risks in five key areas. Despite having numerous policies and procedures in its office manual, the firm did not have a documented FWRA until December 2022. The FWRA provided to the SRA's AML Officer in December 2022 was deemed non-compliant as it was not tailored to the firm. However, in May 2023, an updated and compliant FWRA was provided to the SRA.
In addition to the FWRA, the firm did not have documented policies, controls, and procedures (PCPs) from June 2017 to October 2018, violating Regulation 19 of the MLRs 2017. Between October 2018 and July 2023, the firm still failed to have adequate PCPs. The firm's PCPs, supplied in December 2022, were non-compliant as they lacked mandatory components specified by the regulations. A compliant AML policy was eventually provided in July 2023.
In one file reviewed by the SRA's AML Officer, the firm failed to conduct adequate source of funds (SoF) checks as required by Regulation 28(11)(a) of the MLRs 2017.
The firm admitted its failure to comply with the MLRs 2017 from June 2017 to November 2019 under the then-applicable regulations, continuing until May and July 2023 when compliance began to be restored.
The investigation concluded with an agreement whereby the law firm accepted a financial penalty of £12,772. This amount was calculated in accordance with the SRA’s published guidance on appropriate financial penalties. The firm's misconduct was categorized as more serious but with medium risk since there was no direct loss to clients. The basic penalty was set at £15,965, which was then reduced by 20% to account for mitigating factors, such as the firm's cooperation with the investigation and immediate rectification of the non-compliant documents. The firm also agreed to cover the SRA’s investigation costs, totaling £1,350 .