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The Rising Tide of SRA Fines: Lessons from Recent Cases
March 26, 2024

1. Introduction

Another wave of fines recently published by the SRA underscores the recent news that the regulator has been intensifying its scrutiny of solicitors’ compliance with anti-money laundering (AML) regulations and the number and severity of the fines are at an all-time high – read our recent article SRA Crackdown on Money Laundering Breaches

This continued surge in fines reflects a growing emphasis on enforcing strict adherence to AML protocols and codes of conduct within the legal profession. Through a series of recent disciplinary decisions, the SRA has highlighted the consequences of failing to maintain robust AML frameworks and the imperative for solicitors to take their obligations seriously and uphold regulatory and codes of conduct standards.

Apart from breaches of AML regulations within the professional sphere, solicitors must also adhere to high standards of conduct outside the office environment. Recently published cases have highlighted the importance of maintaining appropriate behaviour outside of the office and the repercussions of misconduct in such settings.

Below we cover some of the most recently published decisions.

2. Failures in AML Compliance

Case 1: Firm Fined £12,181 For Failures in AML Compliance – In a recent disciplinary decision by the Solicitors Regulation Authority (SRA), a firm has been issued a financial penalty of £12,181 for failing to uphold anti-money laundering (AML) regulations. The firm neglected to maintain crucial documentation to prevent money laundering and terrorist financing activities, breaching regulatory obligations spanning several years. Despite guidance from the SRA, deficiencies in firm-wide risk assessment and control procedures persisted until April and May 2023. The severity of the misconduct warranted a financial penalty and highlighted the importance of compliance with AML requirements. Read the full details here: https://www.sra.org.uk/consumers/solicitor-check/567465/

Case 2: Firm Fined £4,293 Plus Costs for Failures in AML Policies, Controls and Procedures – Following an investigation prompted by the SRA’s AML Proactive Supervision team, the firm agreed to a £4,293 fine for non-compliance with Money Laundering Regulations 2017 (MLRs 2017). Despite initial inadequacies in their policies, controls, and risk assessment processes, the firm swiftly rectified these shortcomings. While no direct harm to clients was evident, the failure to ensure proper AML documentation emphasised the risks associated with non-compliance. The firm was fined £4,293 plus £600 costs. Read the full details here: https://www.sra.org.uk/consumers/solicitor-check/439384/

Case 3: Firm Fined £19,383 Plus Costs For CDD Failures in Conveyancing Case – A firm found itself at the centre of an SRA investigation due to its involvement in a fraudulent conveyancing transaction and deficiencies in AML compliance. The firm failed to verify client identification documents and act on AML reports, which resulted in substantial harm and vendor fraud facilitation. Consequently, they were fined £19,383 and directed to cover investigation costs. However, mitigating factors such as early admission, cooperation, and remediation efforts were considered in determining the fine, highlighting the significance of swift action and compliance in maintaining public trust. Read the full details here: https://www.sra.org.uk/consumers/solicitor-check/635237/

3. Conduct Beyond The Office: Lessons From Disciplinary Cases

Case 1: Solicitor Suspended For Dunken Behaviour at Christmas Party – The Solicitors Disciplinary Tribunal heard the case of junior lawyer, who, during the office Christmas party, behaved inappropriately towards a colleague, referred to as Person A. Under the influence of alcohol, he

made unwanted sexual advances towards Person A, including making explicit comments and touching her inappropriately.

Despite his claim of being heavily intoxicated and having little recollection of the events, the tribunal emphasised the seriousness of his misconduct. They highlighted that solicitors are held to a high standard of behaviour, and engaging in inappropriate, unwanted, and sexually motivated behaviour is unacceptable. Person A’s account of the incident detailed the distressing impact of his actions, underscoring the need for a workplace free from harassment and misconduct.

The firm’s response to the incident was swift. Following an examination of CCTV footage, the employee was dismissed for gross misconduct.

Following The Solicitors Disciplinary Tribunal, the Solicitor who was admitted in 2016 was suspended for three months and ordered to pay £10,000 in costs. Read the full article on the Law Society Gazette here

Case 2: Solicitor Fined £1000 Plus Costs Following Drink Drive Conviction – On the evening of 27 May 2023, a solicitor from a Kent law firm was arrested for driving under the influence of alcohol, registering a breathalyser reading well above the legal limit. Subsequently, she pleaded guilty and was convicted of the offense, leading to a 24-month driving disqualification and accompanying fines and costs. She promptly notified both her employer and the Solicitors Regulation Authority (SRA) of her arrest and conviction. Despite the mitigating factors, including personal issues and remorse, the SRA deemed a fine of £1,000 as the appropriate outcome for her misconduct. While the incident may have been isolated and out of character, the severity of the drink-drive sentence imposed weighed heavily in the decision-making process.

The SRA’s enforcement strategy underscores the need for solicitors to uphold trust and public confidence in the legal profession, even in their personal lives. The publication of this agreement serves as a transparent acknowledgment of the disciplinary process, reinforcing the accountability of legal professionals for their actions both within and outside the workplace. Read the full details here: https://www.sra.org.uk/consumers/solicitor-check/577943/

4. Expectations From The SRA

These are not isolated cases. There have been several recent examples where the regulators of both the bar and the solicitors’ profession have been stringent in their dealings with anyone they found in breach of their rules.

The regulator has made it clear it will focus on all cases of serious misconduct, not just on areas of obvious regulatory requirements such as AML Compliance and Firm regulatory procedures. Alongside understanding responsibilities regarding firm compliance, firms and their staff must familiarise themselves with the SRA’s Principles, Codes of Conduct, and expectations regarding behaviour in their personal lives and conduct online. Read our recent articles:

5. Understanding Your Obligations

Due to the level of regulation that applies to law firms, their management and supervision, setting out how a firm operates, including the conduct expectations of staff, in a series of policies, procedures, and documents is essential for all law firms. Secondly, training all your staff on your firm’s policies and procedures is vital. Furthermore, it should include your expectations on how

personal behaviour once out of the office – including online – reflects on the firm, reminding them of their professional and regulatory obligations. Once training has been provided, be sure this is recorded as proof and that staff have easy access to policies and support from managers or the firm, especially for remote workers who are distanced from the traditional office environment.

6. Regulatory Guidance and Support from Industry Experts

If you believe your firm may be at risk, would like guidance on how your firm should approach social media policies, or wish to confirm your firm is achieving the required standard, at The Strategic Partner, we offer a range of solutions which include: –

  • Review – Review 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.
  • Training – Whether you seek training on a 1-2-1 or group basis, The Strategic Partner has a range of training courses and mentoring programmes to suit any firm, and we can also design additional bespoke courses you need. We have trained staff from firms of all sizes, and our clients range from sole practitioners to multi-office, multi-service firms with overseas offices.
  • Auditing – Procedural staff, systems, and files to ensure the procedures are up to the required standard and being implemented at the case level with a report of the outcome.
  • Solutions – Implementation of robust solutions to ensure the firm achieves compliance and then maintains compliance through the provision of ongoing support and assistance –

7. Get in Touch

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 to keep this up to date, you can call us on 020 3911 9710 or email us info@thestrategicpartner.co.uk.

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