- Publication Date
- 2023-01-04
The following is the modified text of the SRA audit case study:
The Solicitors Regulation Authority (SRA) conducted an audit of a law firm following a proactive inspection related to anti-money laundering (AML) compliance. The investigation identified concerns about the law firm's adherence to the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017). The law firm did not have a compliant AML practice-wide risk assessment until August 2022 and had not adequately addressed guidance on this topic.
The law firm made an incorrect declaration in May 2020 that its risk assessment was compliant when it was not. The assessment failed to cover key risk areas such as clients, geographic areas, services, delivery methods, and transactions. The risks related to conveyancing, a significant part of the firm's work, were not adequately addressed in this risk assessment. Additionally, the firm lacked compliant AML policies, controls, and procedures as required by Regulation 19 of the MLRs 2017.
The firm admitted to breaches of regulatory obligations up to August 2022, failing to comply with statutory obligations under both the SRA Principles 2011 and 2019 and related codes of conduct. These included the lack of effective systems to manage risks of money laundering and regulatory compliance.
The SRA concluded that the conduct of the firm showed a disregard for statutory obligations and posed potential risks by facilitating dubious transactions that could lead to money laundering. The firm had not established an adequate practice-wide risk assessment, which was expected given the nature of its work. Despite a lack of immediate harm to consumers or third parties, the SRA found it necessary to impose a financial penalty.
The audit revealed that no financial gain was made by the firm from these breaches. The firm cooperated with the SRA, admitted to the breaches, and showed remorse for its actions. The audit concluded that the firm took steps toward compliance, reducing the risk of future breaches. In consideration of these findings, the SRA determined a financial penalty was appropriate to uphold professional standards and public confidence, without providing specific details on the fine's justification.