The firm was fined for not ensuring it had relevant documentation in place to prevent activities relating to money laundering and terrorist financing as required by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017).
In September of 2023, an SRA AML officer notified the firm that it had failed to comply with the MLRs 2017 following a desk-based review, and referred the matter to the SRA’s AML investigation team.
The firm was notified of its breaches and was given guidance on how it should move forward. Following further engagement with the regulator, the firm revised its Firm Wide Risk Assessment and PCPs so that they were compliant with the MLRs.
The SRA discovered that between 26 June 2017 and 29 October 2023, the Hertfordshire firm failed to have in place a documented assessment of the risks of money laundering and terrorist financing to which its business was subject (a firm-wide risk assessment), pursuant to Regulation 18(1) and 18(4) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017).
It was further discovered that between 26 June 2017 and 30 November 2023, the firm failed to establish and maintain fully compliant policies, controls, and procedures (PCPs) to mitigate and effectively manage the risks of money laundering and terrorist financing, identified in any risk assessment (FWRA), pursuant to Regulation 19(1)(a) of the MLRs 2017, and regularly update them pursuant to Regulation 19(1)(b) of the MLRs 2017.
The firm was ordered to pay a financial penalty of £21,588 in addition to costs of £1,350.
This firm’s conduct was serious by reference to the following in the SRA Enforcement Strategy:
- The findings related to breaches of the MLRs 2017, which protect the public from the severe consequences of money laundering and terrorist financing.
- The firm’s conduct was a breach of its regulatory obligations – they persisted for longer than was acceptable and added to a pattern of misconduct.
- The firm was responsible for its conduct which had the potential to cause harm to the public interest and public confidence in the profession as a whole.
The firm’s conduct was placed in conduct band C, which has a financial penalty of 1.6 per cent to 3.2 per cent of annual domestic turnover. The firm’s conduct was placed in the mid-range of this band at C3, which is 2.4 per cent of annual domestic turnover.
This conduct band placement was partly due to the fact that the firm fully cooperated with the SRA’s investigation. It also took immediate remedial action and, as a result, now has fully compliant AML documentation in place.
Read the full SRA report here.