Two firms have been fined for failing anti-money laundering (AML) inspections when the Solicitors Regulation Authority discovered neither had a compliant risk assessment and ‘therefore failed to have sufficient regard for the SRA’s warning notice’.
Hallam Solicitors, based in Leeds, was fined £2,000 and must pay the SRA’s investigation costs of £600 after failing a proactive AML inspection.
The investigation found the firm did not have a compliant AML practice-wide risk assessment until 2 November 2020 and incorrectly made a declaration to the SRA on 23 October 2020 that its firm-wide risk assessment was compliant.
The SRA’s report said: ‘The risks associated with conveyancing and controlling client money, a significant area of work for the firm accounting to around 60% of its fee income, should have been addressed on the firm-wide risk assessment but had been omitted.’
Fussell Wright Solicitors, based in Bristol, was also fined £2,000 and must pay the £1,350 costs of the SRA investigation.
The regulator found the firm did not have in place a compliant AML firm-wide risk assessment until 5 August 2022 and incorrectly stated it was compliant and in line with relevant guidance on 13 May 2020.
Conveyancing and controlling client money was deemed a ‘significant’ area of work for Fussell Wright, making up around half of its fee income, according to the SRA.
Both firms admitted failure to comply with money laundering rules.
The SRA, in reports about both firms, said: ‘The 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 (and/or terrorist financing).’
The latest fines are part of the SRA’s efforts to combat misconduct in the profession. In its anti-money laundering annual report 2021/22, the SRA said it carried out 273 AML inspections or desk-based reviews of solicitors and law firms. There were 252 reports of suspected breaches made to the SRA and during the 2021/22 time period, 29 fines were issued totalling £286,976 with a further five fines totalling £92,500 from cases brought to the SDT.
Source: The Law Society Gazette, 6th January 2023