In the wake of the increasing AML crackdowns, the Solicitors Regulation Authority has fined a Midlands firm £13,000 after reviewing its files.
An SRA report recently revealed the findings of an SRA supervision team that reportedly reviewed 11 client files last year while inspecting a law firm located in Stafford. In consequence, the firm was made aware that a number of client and matter risk assessments were found to be missing.
The firm was directed to put in place a compliance plan for risk assessments and review all open matters to ensure compliance. From February of last year onwards, the firm insisted that risk assessments had been previously carried out, though on an informal basis, and accepted that improper documentation had been the outcome.
The firm also admitted to failures in meeting the required money laundering regulations concerning customer due diligence between 2011 and 2017. Between 2017 and 2023, however, the firm also reportedly failed to have the necessary processes in place to assess risk levels in client matters.
Due to the firm’s honesty and cooperation, the financial penalty was reduced, with the sanction set at 2% of the firm’s annual domestic turnover, following an order to pay costs up to £1,350.
The SRA remarked that the matter was a “Long-standing and serious breach of its AML regulatory obligations, which persisted for longer than was reasonable”.
Despite providing numerous guidance covering the manifold obligations law firms are expected to comply with, the regulator is still finding regulation breaches concerning missing or inadequate documentation. “It is not sufficient to say that assessments were being carried out but not documented,’ the SRA added. “Although the firm took steps to become fully compliant, this was only after the involvement of the SRA.”
Since last year, the SRA has increased firm site inspections by 34%, while desk-based reviews have increased by 350%. After a data collection exercise in August and September, the SRA requested data on AML, sanctions, and suspicious activity reports from all firms.
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