Welcome to the Regulation & Compliance Office’s fortnightly roundup, where we look at all the latest stories to keep you ahead and informed in the world of law and compliance.

The RACO roundup is just another way in which we keep the solicitors and other law professionals we work with in the know, so we can ascertain that you are never missing the vital developments occurring in your profession.

Below, you will find the most recent headlines selected by our compliance experts, followed by a Security Section, where we will also give you an overview of the latest scams currently impacting solicitors and their clients.

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Firm Manager Fined £32,500 over AML Breaches

A firm manager, whose client was a politically exposed person, has been fined £32,500, following restrictions imposed on his employment after it was discovered that he had breached anti-money laundering regulations.

In relation to two transactions of £1.1m and £1.9m, the Solicitors Regulation Authority found that the manager and director of a firm based in Hampshire had failed to take adequate measures to establish the source of wealth and funds of a politically exposed person.

Further allegations followed that the director had used the firm’s client account as a banking facility in relation to the £1.1m in 2014, and from 2014 to 2022 had used the firm’s client account as a banking facility for personal payments. Both allegations have since been proved, with the director also admitting to the latter allegation.

Following the investigation, the manager/director admitted failing to take appropriate steps to establish the source of wealth and source of funds of his client and accepted that the checks undertaken were not sufficient to comply with the MLRs.

The Solicitors Disciplinary Tribunal said the manager/director had prioritised the transaction over his regulatory obligations, and that the steps that were taken were “rudimentary, piecemeal and naïve,” adding that the failures were “culpable and reprehensible.”

“Whilst not motivated by direct personal gain to commit misconduct, his misconduct arose as a result of his prioritising expediency and convenience over compliance with his regulatory obligations. He subordinated those duties to his desire not to jeopardise the transaction for an important client.”

The Hampshire-based manager/director was fined £32,500 and faces imposed restrictions on his practice for five years, meaning he

• may not practise as a sole practitioner, manager or owner of an authorised or recognised body,
• take on various roles, including compliance officer for legal practice or a money laundering compliance officer, or
• be a signatory on any client account.

An additional £50,000 was charged to him in costs.

Source: here.

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Solicitor Struck off for Handling £8.8m in Unverified Funds 

After failing to carry out money-laundering checks on the £8.8 million they were handling, a solicitor has been struck off for what the Solicitors Regulation Authority is referring to as “widespread and fundamental non-compliance”. 

The solicitor in question operated as a sole practitioner, working for the most part in residential conveyancing, when the regulator raised concerns across the profession about firm-wide risk assessments (FWRA). In 2019, the solicitor responded to a notice asking whether the solicitor’s firm had one in place. The solicitor then responded to affirm that an FWRA was in place, despite the fact that this wasn’t true.

In a later interview with an SRA investigator, however, the solicitor confessed to not having one in place – neither before nor at the time of intervention. The solicitor also confessed to not knowing what a firm-wide risk assessment was.

The Solicitors Disciplinary Tribunal reportedly heard of the solicitor’s failings concerning essential source of wealth and funds checks for as many as 63 clients, in addition to conveyancing transactions amounting to over £8m.

The SDT: “For the six years the respondent was its sole practitioner, the firm was vulnerable to the risk of being manipulated for the use of money laundering and/or terrorist financing”.

In conclusion, the SDT commented on how the dishonesty was a “very serious example of dishonesty given his position as a solicitor and compliance officer for legal practice, in a high-risk area, and in response to a direct regulatory inquiry. The widespread and fundamental non-compliance with critical regulations represented systemic failures throughout the six years of his sole practice.”

“Clients suffered actual harm through being deprived of over £100,000 in residual balances for years. The delays in reporting and misleading information prevented the SRA from gaining full knowledge of the issues sooner, thereby delaying intervention and allowing the risk to client money to persist.”

Read the full article here.

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UK Government Proposed Changes to Money Laundering Regulations

We have previously reported that the Government has consulted on changes to improve the effectiveness of the Money Laundering Regulations (MLRs). The outcome of that consultation has now been published and can be viewed here – MLRs_Consultation_Response.pdf.

The reality for Law Firms is that it does not appear to bring any significant change. The Legal Sector Affinity Group (LSAG) has already addressed a number of the points that will be further clarified.  While there may be some adaptations to LSAG, they appear to be relatively minor.

The theme of the consultation was to:

• Make customer due diligence more proportionate and effective.
• Strengthen system coordination on economic crime.
• Provide clarity on the scope of the MLRs.
• Reform registration requirements for the Trust Registration Service.

The areas of change have been separated into the following sections:

• Enhanced due diligence on complex transactions.
• Enhanced due diligence on high-risk third countries.
• Due diligence on pooled client accounts.
• Due diligence triggers for certain non-financial firms.
• Onboarding of customers in bank insolvency scenarios.
• Information sharing between supervisors and other public bodies.
• Supervisor cooperation with Companies House.
• Currency thresholds that are currently in euros.
• Regulation of the sale of ‘off-the-shelf’ companies by Trust and Company Service Providers.
• Registration and change in control for cryptoasset service providers.
• Registration requirements for the Trust Registration Service.

To summarise the outcome and proposals, it appears we can expect the following.

• Customer Due Diligence
  • There will be no fundamental changes, but the following is important to note:
    • Clarity to be provided on when a business relationship is established (LSAG already assists with this).
    • Better guidance on what constitutes establishing a business relationship on a sectoral basis.
• Source of funds Checks
  • Improved guidance to better explain what is necessary to complete source of funds checks (note LSAG was updated in 2025 on this point).
• Acting For Clients – clarity in relation to agents and third parties
  • Clearer guidance by sector on what ‘acting for’ means when it comes to dealing with natural persons (individuals) and non-natural persons (entities), with a focus on employees.
• Digital identity verification
  • Clarity on the definition of a digital identity, and to provide further detail on how digital identities can be used in line with the MLRs’ risk-based approach. 
  • Linking Identity Check Services to the new Data (Use and Access) Act 2025 and the introduction of audits on providers.
• Enhanced due diligence (EDD)
  • No changes are planned for what will trigger EDD, but sectoral guidance and the conditions under which EDD is mandatory may be provided (LSAG already does this).
• ‘Complex or unusually large’ transactions
  • The regulation will be amended to clarify that EDD is required on “unusually complex” transactions, instead of all complex transactions.
  • There will be no change to the requirement to apply EDD to “unusually large” transactions.
• High Risk Third Countries (HRTC)
  • The regulations will be amended in respect of HRTCs, mandating EDD only where the relevant transactions or customer relationships involve a person established in a Call for Action country, not an Increased Monitoring List country.
  • Broader requirements around assessing geographic risk will remain, including provisions that firms must consider both the Financial Action Task Force (FATF) lists when carrying out customer risk assessments.
  • Firms will continue to be required to apply EDD based on geographic risk factors.
  • The FATF standards only require EDD to be mandatory for countries on the Call for Action list, which will continue to be the case following this change.
  • It is expected that Firms should direct resources to matters involving high-value compliance activity.
• Simplified due diligence (SDD)
  • Pooled Client Account monies will no longer qualify for SDD.
• Regulation of sale of off-the-shelf companies by Trust and Company Service Providers (TCSPs) 
  • The regulations will be amended to include the sale of off-the-shelf companies within their scope, thereby putting this within the scope of regulated TCSP activity.
• Registration of non-UK express trusts that hold UK land 
  • The regulations will be amended to include within the regulations all non-UK trusts that hold an interest in UK land and property acquired before 6 October 2020.
  • The Government will bring all non-UK express trusts holding UK land within the Trust Registration Service data sharing rules and thus make them available to the public on request.
• De minimis exemption for registration
  • The Government will introduce a de minimis exemption for certain trusts currently required to register on TRS and provide simplified criteria in determining whether a trust qualifies for a de minimis exemption.
  • The exemption will apply to trusts that:
    • are not liable for relevant UK taxes.
    • do not own or have an interest, (whole or in part), in UK land or property.
    • do not exceed £10,000 in the value of accumulated assets held.
    • do not have more than £5,000 in income per annum.
    • do not have more than £2,000 of “appreciable” non-financial assets (art, jewellery, antiques, etc).

There are other proposed changes, but these relate more to the supervisors and out of industry issues that will not impact Law Firms directly.

The proposed changes need to be put before Parliament before they are endorsed and brought into the regulations.

If you are a member of the Regulation and Compliance Offices (RACO) compliance service, we will update your AML and related policies to reflect the final changes when they are released.

Compliance and Regulation Support UK

All firms must demonstrate and uphold high standards in their AML systems and processes, as well as in their management and supervision. This also involves outlining how the firm operates, including the conduct of staff in accordance with established policies, controls, and procedures.

At the Regulation & Compliance Office, we can offer a number of outsourced support solutions, including:

• Regulation & Compliance Service – Our Regulation and Compliance Service, Inc. Risk Management Assessment and AML Risk, provides a cost-effective but essential solution for law firms to ensure they achieve a compliant environment. We work with firms of all types, from sole practitioners through to partnerships, Limited Companies and ABSs. We recognise that it is essential to recognise how a firm implements compliance to tailor the solution to each firm’s working practices. This is why our service is completely bespoke to each firm we work with.
• Regulation & Compliance Outsource Guidance and Support Service – This service provides law firms with a cost-effective outsourced solution which sees the compliance managers of RACO take on the day-to-day guidance and support expected to be provided by COLPs, COFAs, Data Compliance Officers, MLROs and MLCOs. This addition to the Regulation and Compliance Service—including Risk Management and AML Risk—relieves the Compliance Officers from most of the day-to-day burden of keeping up with regulatory requirements and ensures staff have access to compliance and risk advice when they need it.
• Due Diligence & Risk Assessment Service – At the Regulation and Compliance Office (RACO), we provide law firms with a seamless, outsourced solution for Client Due Diligence (CDD) and Risk Assessments. Our Due Diligence and Risk Assessment Service has been designed to enable law firms to focus on the provision of the legal services while we collate the necessary documentation for Due Diligence, Enhanced Due Diligence (where needed), and completion of the Client and Matter Risk Assessment which must be completed on all matters in scope of the Money laundering Regulations 2017.
• AML Training Courses – Our Typical AML Training Includes:
  • AML Training for ALL staff to meet the firm’s obligation to provide annual training.
  • One-to-one training for the MLRO and MLCO on their obligations and requirements.

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S C A M     A L E R T S

Misused Details of James Shaw

The SRA have shared that an account has been set up on a freelancer marketing website in the name of ‘James Shaw’, a real solicitor from Slaughter and May.

The account used James Shaw’s name, SRA ID and claimed that ‘James S’ is a solicitor regulated to provide legal advice.

Please note that any business or transactions through the website using the name ‘James Shaw’ or ‘James S’ are not undertaken by a firm or individual authorised and regulated by the SRA. The account has been reported to the website Fiverr, and a request for the account to be taken down has been made.

Please note: The SRA authorises and regulates a genuine solicitor called James Shaw whose SRA ID is 7020040. The genuine ‘James Angus Shaw’ is employed at Slaughter and May as an associate.

The genuine James Angus Shaw has confirmed he does not have any connection to the website or the individual referred to in the above alert.

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Emails and Calls Falsely Claiming to be from Birketts LLP

The SRA has warned that calls have been made and emails have been sent from individuals misusing the name of a genuine firm of solicitors.

The calls were made by ‘Lauren Campbell’, ‘Victor Romano’ and ‘Andrew Adams’.

An email was sent from ‘laurenc.birketts@gmail.com’.

Please note that the SRA does not authorise or regulate solicitors called ‘Lauren Campbell’ and ‘Victor Romano’. Therefore, any business or transaction through the above email address is not undertaken by a firm or individual authorised and regulated by the SRA.

Please note: the SRA authorises and regulates a genuine firm of solicitors called Birketts LLP. The genuine firm’s head office address is Providence House, 141-145 Princes Street, Ipswich, Suffolk, IP1 1QJ and the telephone number for the head office is 01473 232 300.

The genuine email addresses for the firm use the domain ‘@birketts.co.uk’.

The SRA also authorises and regulates a genuine solicitor called Andrew Adams. The genuine Andrew Adams is believed to have no connection to the above alert.

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Website purporting the name of ‘Kingdom Legal’

The SRA has warned that a website at ‘www.kingdomlegal.co.uk’ is operating and claiming to be a law firm under the name ‘Kingdom Legal’.

The website for ‘Kingdom Legal’ misuses the SRA ID of a genuine solicitor. Please note that the SRA does not authorise or regulate a firm of solicitors called ‘Kingdom Legal’.

Any business or transaction through the website ‘www.kingdomlegal.co.uk’ is not undertaken by a firm or individual authorised and regulated by the SRA.

Please note also that the SRA authorises and regulates Zulekha Bhuta, with the SRA ID 602851. The SRA does not believe that the genuine solicitor is associated with the above matter.

BEEN CONTACTED?

Here’s What to Do…

When a firm’s or an individual’s identity has been copied or cloned, due diligence is necessary. If you receive correspondence you believe to be suspicious, you should conduct your own due diligence by checking the authenticity of the correspondence by contacting the law firm directly by reliable and established means.

You can also contact the SRA directly to find out if individuals or firms are regulated and authorised by the SRA and verify an individual’s or firm’s practising details. Other verification methods, such as checking public records (e.g. telephone directories and company records), may be required in other circumstances.

Compliance Support for Law Firms

We at RACO are always at hand to provide tailored guidance to help you make the most informed and beneficial decisions. We help you understand the recurrent regulatory shifts and work with you to provide solutions. With our team of professional specialists and our renowned legal expertise, we can work with your firm to ensure you are never left unprepared in the wake of legal changes or cyber threats.

For more information on how we can help, call our consultants on 0203 985 8550 or email us at  info@regulationandcomplianceoffice.co.uk