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SRA imposes near maximum fine for breaching AML rules
17 January 2024

A firm which failed to check any of the sources of funds for three property transactions has been fined £23,216 – almost the maximum the Solicitors Regulation Authority can impose.

The sanction was made against Ilford firm TTS Legal Ltd after an investigation into the transactions between 2018 and 2020. The three deals were all financed through mortgages and the clients’ own funds. In the third matter, the firm was instructed by a financial adviser to the client whose identity was not verified by lawyers.

The SRA found ‘areas of concern’ over the firm’s compliance with money laundering regulations and its code of conduct. TTS Legal had no firm-wide risk assessment in place until January 2020 and no policies, controls and procedures to mitigate the risks of money laundering.

In one of the property matters, information received from the client was inconsistent with how they were funding the purchase. The firm recorded that a deposit of £185,000 had purportedly been paid to the seller’s solicitor by a previous firm but TTS Legal failed to make any enquiries to verify this payment.

It transpired that the previous firm had never been instructed in this matter and had never handled a deposit.

The firm also released £46,000 to the seller’s solicitor on the instructions of the client’s financial adviser, who was not authorised to make any such call. At the time, the transaction appeared to have fallen through because the client could not obtain a mortgage, and there was therefore no reason for these funds to be released.

The SRA said: ‘The firm failed to undertake, evidence or scrutinise source of funds, of significant amounts of money. The firm’s enquiries were limited to the location of the funds, as opposed to identifying how and from where the client got the money for the transaction. This meant the firm was unable to satisfy itself that the funds were not the proceeds of crime.’

The regulator noted there was no evidence of harm to consumers or third parties and there was now a lower risk of repetition since the firm had improved its compliance.

The firm was fined 2% of its annual turnover, reduced by 20% to take account of mitigating factors. TTS Legal must also pay £1,350 costs.

Source: The Law Society Gazette, 17 January 2024

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