Regulator Hands Down Record £20k Sanction For Money Laundering

| General


75% of the Business Monies Were Not Assessed For Money Laundering Risks

In mid-January 2023 the SRA handed down a record twenty thousand pounds to a legal services provider in connection with allegations of money laundering. The provider had neither on the evidence implemented any training for its members of staff nor the processes and procedures to deal with money laundering-related activities.  The case is significant because it is the most colossal financial sanction imposed by the regulator after it was provided with the authority to impose more severe penalties

What Happened In The Case?

The legal services provider had submitted to the regulator claiming to comply with current money laundering requirements. However, far from this claim is correct, the Regulator found that this was way wide of the mark. It discovered that 

  • three-quarters of the monies brought in by the provider were not put through the risk assessment process
  • no independent audit procedures were followed 
  • senior members of staff lacked awareness of updated money laundering requirements and
  • zero checks or oversight appear to have been in a position to police the source of funds or the property transfers.     

Is A Risk-Based Approach For Me?

The Law Society advises that for an approach based upon the foundation of risk to be effective providers of legal services need to be considering taking the following action:   

  • gather all information on the foreseeable downside factors involving the respective customer or case
  • relevance of the risks and 
  • emphasizing the above in putting forward the reasoning behind this approach. 

The Society attempted to guide legal professionals through this minefield of compliance by putting the message in stark terms. They need to be conducting themselves correctly because they will not be in a position to reduce the impact of such risks if they have not implemented measures to assess the risk of harm from taking place. 

If such a strategy is adopted Society believes that providers of legal services will make tangible gains: 

  • Increased and workable manageable spread of material in proportion to the hurdles faced)
  • Reducing financial outlay related to compliance 
  • Lower downward pressure on legal service providers and outlay and
  • higher pliability in terms of dealing with forthcoming problems in the transforming business landscape from issues such as the laundering of monies, activities related to terrorism, and other activity.

Lessons Learned? 

Persons in a similar situation and charged with providing legal services should be thinking cautiously about this case and consider proceedings in the following way: 

  • ensuring there are procedures in position to assess the risks associated with money laundering
  • not communicating with the SRA purporting that mitigation processes are in position.
  • reviewing the procedures to assess whether procedures the business has in position are reasonably impenetrable 
  • paying close order to the professional and legal responsibilities and accountabilities regarding Money Laundering
  • assessing whether conduct can inflict damage
  • avoiding enabling money laundering and links to terrorist activities
  • keeping abreast of current legal responsibilities, guidance, and advice published by regulators 
  • implementing risk assessments and maintaining processes 
  • not base their processes in this regard on outdated statutes and legal principles and
  • the Law Society strongly encourage providers of legal services to adopt a strategy with the assessment of risk at its heart and in this regard, they should be altering how much and the kind of obligations it puts in position to comply with its obligations from a risk perspective in terms of:
  • strength
  • density and
  • quantity

ASSESSING FIRMS

#BlakeMorgan #LClyde&CoLLP #CapsticksLLP #Hempsons #KingsleyNapleyLLP #RadcliffesLeBrasseur #BatesWells #CMS #DACBeachcroftLLP #FieldFisher #HerbertSmithFreehills #Russell-CookeLLP #BlackfordsLLP #CharlesRussellSpeechlysLLP #KeoughLLP #MurdochsSolicitors #StepehensonsSolicItorsLLP

THE ARTICLE WAS WRITTEN USING THE FOLLOWING SOURCES 

[SOURCE 1] Hyde, john – SRA imposes record £20,00 fine for AML failings – Law Society Gazette – 18 January 2023 - SRA imposes record £20,000 fine for AML failings | News | Law Gazette

[SOURCE 2] Hilborne, Nick – Law Firm fined record £20,000 for “reckless” AML breaches – Legal Futures – 18 January 2023 - Law firm fined record £20,000 for “reckless” AML breaches - Legal Futures

[SOURCE 3] Ferguson Bricknell – Solicitors Regulation Authority - SRA | Organisation details | Solicitors Regulation Authority 

[SOURCE 4] Law Society – Anti Money Laundering guidance for the legal sector – 7th July 2022 - Anti-money laundering guidance for the legal sector | The Law Society

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