The Solicitors Regulation Authority has fined yet another law firm the maximum penalty amount after it admitted failing to carry out sufficient checks in regard to a foreign client considered risky.
The SRA has now confirmed the fine was issued after it discovered the central London-based firm failed to initiate the adequate measures required to establish the source of wealth in its transactions with an international client considered a politically exposed person (PEP). It has since been revealed that the firm failed to conduct enhanced ongoing monitoring of the same client.
For almost eight years to 2020, the firm acted for the PEP and their associated companies across 36 matters consisting of property purchases, refinancing and reassignment work.
It is essential to note that the source of wealth and source of funds checks were, in this instance, required by the money laundering regulations. The SRA has since stated that the breaches could have resulted in the firm unknowingly carrying out money laundering or terrorist financing and had the potential to cause ‘significant harm’.
The SRA further stated that “The firm’s conduct was serious, and diminished trust in the legal profession. Any lesser sanction would not provide a credible deterrent to the firm and others.”
The penalty was assessed as being between 1.6% and 3.2% of the firm’s annual turnover. Due to this, the basic fine was set at £39,455. This was further adjusted, however, to account for the firm’s early admissions and prompt remedial action (including additional training, new processes, and continued cooperation.
As a result, the adjusted fine was £646 above the SRA’s maximum fining power. However, both parties agreed to reduce it to £25,000, owing to the SRA’s own fining guidance that gives discretion to reduce fines to come under the maximum in exceptional circumstances. This is practised so as to avoid proceedings going to the Solicitors Disciplinary Tribunal.
The SRA further stated that, “Such proceedings would undoubtedly attract increased legal costs and excessive and unnecessary delays and resource impact. A financial penalty of £25,000 would still have the effect of setting a credible deterrent and upholding public confidence in the regulatory and disciplinary process.”
Source: here.
In addition to the £25,000, the firm was ordered to pay £1,350 in costs. For related stories concerning the SRA and recent fines for non-compliance, see below:
Recent SRA Fines
- Long-Serving Solicitor Fined £15,000 for Client Check Failings
- Multiple Breaches Result in £25,000 Fine for Both Firm & Compliance Officer
- Maximum £25,000 Fine Imposed for South East Firm
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