The Solicitors Regulation Authority carried out an investigation into a firm based in Northumberland following an inspection by its AML Proactive Supervision Team.
The inspection and subsequent investigation identified areas of concern in relation to the firm’s compliance with
- the Money Laundering Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017),
- The SRA Principles 2019,
- the SRA Principles 2011,
- the SRA Code of Conduct for Firms 2019 and
- the SRA Code of Conduct 2011.
The firm, a recognised body, authorised and regulated by the SRA, agreed to the following outcome:
- To pay a financial penalty in the sum of £15,598 under Rule 3.1(b) of the SRA Regulatory and Disciplinary Procedure Rules.
- To the publication of the agreement under Rule 9.2 of the SRA Regulatory and Disciplinary Procedure Rules (more here).
- To pay the costs of the investigation of £600 under Rule 10.1 and Schedule 1 of the SRA Regulatory and Disciplinary Procedures Rules.
Firm-wide risk assessment (FWRA)
Between 2017 and 2021, the firm failed to have in place an appropriate assessment of the risks of money laundering and terrorist financing to which its business was subject (a firm-wide risk assessment (FWRA), pursuant to Regulation 18(1) and 18(4) of the MLRs 2017.
Policies, controls and procedures (PCPs)
Between 2017 and 2020, the firm failed to establish and maintain fully compliant policies, controls, and procedures (PCPs) to mitigate and manage effectively 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,
Between 2020 and 2024, the firm failed to regularly review and update its PCPs pursuant to Regulation 19(1)(b) of the MLRs 2017.
Customer due diligence (CDD) measures / ongoing monitoring and source of funds (SoF)
The firm also failed to conduct appropriate customer due diligence (CDD) measures, and ongoing monitoring (including, where necessary, the source of funds (SoF), pursuant to Regulations 28(2) and 28(11) of the MLRs 2017.
The firm has since confirmed it has put in place measures to ensure continuing and future compliance, including updating and amending its PCPs, and employed the services of an external auditor who assisted in creating a compliant AML control environment. Following the implementation of the new AML controls, the firm also rolled out training to staff.
Read the full SRA report here.