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Another Firm Fined for Compliant Risk Assessment and AML Failures
November 23, 2023

1. Introduction: SRA Fines Firm £3,800 Plus Costs

With the regulator considering  automatic fines for money laundering regulation failures and their updated approach to issuing financial penalties for proven misconduct, a recently published decision by the Solicitors Regulation Authority (SRA) is a stark reminder of the importance of stringent adherence to compliance regulations. 

The decision involves a firm that failed to have a fully compliant firm-wide risk assessment in place, resulting in the SRA imposing a financial penalty of £3,800 and ordering the firm to pay costs of £1,350. This blog highlights areas of the misconduct and issues raised.  

Read the full decision details here. 

2. Facts of the Misconduct and Agreed Outcome

The firm has been fined £3,800 and ordered to pay costs of £1,350 for multiple breaches of the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations between June 26, 2017, and February 16, 2023. The misconduct includes: 

  • Failure to have a compliant firm-wide risk assessment. 
  • A disregard of the SRA’s warning notice on risk assessments. 
  • Providing inaccurate information to the SRA. 

The firm also neglected to document client/matter risk assessments, perform adequate customer due diligence, and carry out enhanced due diligence. 

It was decided that a financial penalty was an appropriate and proportionate sanction. The firm accepted these failings and has agreed to the financial penalty and costs order. 

 3. What SRA Principles were Breached?

The SRA’s investigation uncovered several issues, including failure to conduct enhanced due checks, and failure to have a fully compliant firm-wide risk assessment in place. Thus, the firm breached the following principles: 

1. SRA Principles 2011 

  • Principle 6. You must behave in a way that maintains the trust the public places in you and in the provision of legal services. 
  • Principle 8. You must run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles. 

2. SRA Principles 2019 

  • Principle 2: You must act in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons. 
  • SRA Outcome 2011 breached 
  • Outcome 7.5 of the SRA Code of Conduct 2011 stated that a solicitor must comply with legislation applicable to his business, including anti-money laundering and data protection legislation. 

3. SRA Code of Conduct for Firms 2019 breached. 

  • Paragraphs 2.1, 3.1, and 3.3(a) provide that solicitors must : 
  • have effective governance structures, arrangements, systems and controls in place to ensure regulatory and legislative requirements are met, and compliance officers are able to discharge their duties 
  • keep up to date with and follow the law and regulation governing the way they work 
  • respond promptly to the SRA and provide full and accurate explanations, information and documentation in response to any requests or requirements. 

4. Guidance for Law Firms.

At The Strategic Partner, we aim to empower firms to effectively manage risk, compliance, and regulation, allowing them to focus on delivering exceptional service to their clients.

Our services are designed to provide firms and their employees with the comfort of knowing that even in the busiest of times, you remain compliant and can evidence that you are.

We can offer expert guidance and support, including:

  • Risk Management and Compliance Review – A review of the firm’s approach to regulation and compliance to include all regulatory requirements and AML procedures. The output of this provides the firm with a written gap analysis and solutions to remedy any issues.
  • Risk Assessment Service and Independent AML Audit– A review of the firm’s approach to regulation and compliance to include all regulatory requirements and AML procedures. The output of this provides the firm with a written gap analysis and solutions to remedy any issues.
  • Regulation 21 AML 2017 Independent Audit– An audit that reviews the firm’s approach to regulation and compliance, including AML procedures, and meets the requirements of Regulation 21 of the AML 2017. The output will provide the firm with a written gap analysis and solutions to remedy any issues discovered and ensure compliance.
  • Training and Education– We offer customised training programs to educate your staff on AML regulations, source of funds and source of wealth enquiries, risk assessment, and suspicious activity detection. Our training ensures that your team has the knowledge and skills to fulfil their compliance responsibilities.
  • Auditing– Procedural staff, systems, and files to ensure the procedures are up to the required standard and being implemented at case level with a report of the outcome.
  • Expert Process and Procedures DraftingThe Strategic Partner provides quality and bespoke document drafting in consultation with the firm and can incorporate a range of document drafting services, alongside Client Care documents, our teams can help with more complex series of documents, such as Risk and Compliance and Anti-Money Laundering.
  • Ongoing Compliance Support– Our experts provide ongoing support and guidance, keeping you up-to-date with the latest AML regulations and best practices. We offer regular compliance reviews, advice on complex cases, and assistance with regulatory reporting requirements.

Packaged Solutions – Implementation of robust solutions to ensure the firm achieves compliance and then maintains compliance through the provision of ongoing support and assistance:

Get in Touch with The Strategic Partner

For more information on The Strategic Partner and to discuss how we may be able to assist in accelerating your risk management or compliance and regulation or simply to keep this up to date, you can call us on 020 3911 9710 or email us info@thestrategicpartner.co.uk. 

View and download the PDF version of this article here.

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