Fines of more than £57,000 announced across a two-day period set an alarming precedent for law firms, as the Solicitors Regulation Authority continue their relentless clampdown on those non-compliant with money laundering regulations.

The regulator has confirmed financial sanctions against five law firms for their failures to comply with obligations to manage the risk of and prevent money laundering-related crime.

The most notable of these fines was issued to a firm based in Oldham.The financial penalty amounted to £24,123, along with additional costs of up to £600, and was given for failures relating to its documented risk assessment between 2017 and 2023. Based on three of six files reviewed by the SRA, it was discovered that the Oldham-based firm failed to conduct client and matter risk assessments.

Despite there being no evidence of harm to consumers or third parties, the SRA stated the firm’s conduct showed a ‘disregard for statutory and regulatory obligations’ and had the potential to cause harm by facilitating dubious transactions that could have led to money laundering. This would have likely been avoidable had the firm established appropriate AML documentation and controls.

Regardless of the low risk of repetition and that the firm did not financially benefit from the misconduct above, the SRA is still demonstrating a severe and uncompromising stance on firms they discover to be falling short of the expected standards. Though the basic penalty was above £30,000, it was discounted by 20% due to mitigating factors, which brought it beneath the £25,000 limit for those the regulator can sanction.

Another firm, based in Surrey, was fined £18,094 after compliance issues were raised by inspectors working in conjunction with the SRA. A compliant risk assessment hadn’t been in place from 2017 to 2023. From as far back as 2011, the firm could not demonstrate that it had carried out the necessary due diligence on the newer clients it was working with.

Again, there was no evidence of harm to any consumer. Despite there being no financial benefit, the firm was still said to have shown a disregard for regulatory requirements, which had created the potential to cause harm.

Similarly, a law firm based in northwest London was also fined £6,000 for not having in place a documented firm-wide risk assessment for as long as five years. Further failures to tailor its new risk assessment to the firm were also noted. In addition, the firm failed to maintain adequate records of its risk assessment. The firm submitted two three-year-old qualified accountant reports to the regulator which were found to have allowed a client account shortage of nearly £900 to exist through payments in excess of funds held.

Meanwhile, a firm based in Wolverhampton and another in Birmingham were also fined £4,932 and £3,828, respectively, for similar AML breaches. In both cases, no harm had come to consumers or third parties, and the breaches discovered were remedied promptly.

Source: here

Related Articles:

• £22,000 Gift Lands Solicitor in Hot Water With SRA
• SRA: ‘Only 22% of Law Firms Compliant with Anti-Money Laundering Regulations’
• Four Rule Breaches Lead to SRA Closing Mayfair Law Firm

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All firms need to 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 through set policies, controls and procedures.

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

Regulation & Compliance Service  – Our Risk Management Assessment Service has been specifically designed to review and update a firm’s approach to risk and compliance management.

MLR 2017 Regulation 21  Independent Audit – A review of the firm’s approach to regulation and compliance, including AML procedures with the audit meeting the requirements of Regulation 21 of AML 2017. The output provides the firm with a written gap analysis and solutions to remedy any issues and ensure compliance.

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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