- Publication Date
- 2024-02-23
The Solicitors Regulation Authority (SRA) conducted an audit of a law firm's compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017). The review was initiated following concerns identified during a desk-based monitoring process conducted by the SRA's AML Proactive Supervision team.
The review revealed that the law firm failed to maintain a documented firm-wide risk assessment (FWRA) from June 2017 until July 2023. The FWRA provided in July 2023 still fell short of the requirements laid out by the MLRs 2017 as it lacked sufficient detail in three critical areas. It wasn't until September 2023 that the firm submitted an updated and compliant FWRA.
Furthermore, between June 2017 and August 2023, the law firm did not have effective policies, controls, and procedures (PCPs) in place to mitigate and manage the risks associated with money laundering and terrorist financing. This was a violation of Regulation 19 of the MLRs 2017. In December 2023, the firm finally presented AML policies that complied with Regulation 19.
During the audit period, the law firm breached several key regulations. From June 2017 to November 2019, the firm did not adhere to the requirements set under the SRA Handbook 2011. From November 2019 to September 2023, they failed to comply with the governance requirements set out in the updated SRA regulatory standards. Despite these breaches, the firm was cooperative throughout the investigation, taking steps to rectify the documentation issues and becoming fully compliant.
The SRA reached a regulatory settlement agreement with the law firm, which included the imposition of a financial penalty adjusted for mitigating factors. The penalty was calculated based on the firm's domestic turnover, leading to an agreed financial penalty of £3,640.
The agreement highlights the importance of maintaining rigorous and tailored governance systems and controls to uphold the legal and ethical standards expected within the profession. The SRA aims to maintain public trust and confidence in legal services by ensuring compliance with anti-money laundering legislation and regulatory requirements.