- Publication Date
- 2023-01-17
The Solicitors Regulation Authority (SRA) conducted an audit of a law firm to evaluate its compliance with anti-money laundering (AML) regulations. The investigation identified several deficiencies in the firm's AML practices.
The firm had not established a compliant AML firm-wide risk assessment until July 2022, which was more than five years after the introduction of the Money Laundering Regulations 2017. Furthermore, an incomplete and outdated practice-wide risk assessment led to misleading statements about compliance status, which were discovered during the investigation.
The investigation also found that the firm had not established an independent audit function. The absence of proper audits contributed to the firm's failure to maintain and update its policies, controls, and procedures. Training deficiencies were another issue identified, as the firm had not ensured that all relevant employees received specific training on AML regulations. The failure to keep proper training records compounded this problem.
The SRA's onsite examination of client files revealed inadequate ongoing monitoring, lapses in the verification of fund sources, and a lack of due diligence for third-party funds. These shortcomings contravened the regulations and put the firm at risk of facilitating money laundering activities.
The agreed outcome included a financial penalty of £20,000, reflecting the severity of the AML compliance breaches. This action underscores the importance of maintaining public confidence in legal services and serving as a deterrent against non-compliance within the legal sector. The SRA considers such measures necessary to ensure that firms uphold professional standards and protect against the risks of money laundering.