AML: Risk assessment failures
A law firm that did not have sufficient anti-money laundering (AML) controls in place for nearly six years has been fined £16,000 for its failures.
Bracknell firm Fairbrother & Darlow is the latest in a string of firms fined significant sums for AML breaches – two firms and a solicitor were collectively fined nearly £50,000 last month, with a further £14,000 for two firms earlier this.
Fairbrother & Darlow was fined by the Solicitors Regulation Authority (SRA) after the regulator undertook a desk-based review nearly two years ago to assess its compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
It found no compliant firm-wide risk assessment or policies, control and procedures (PCPs) in place, while four in-scope files had no client/matter risk assessments.
Fairbrother & Darlow had submitted an online declaration in January 2020 to say that it was compliant with the 2017 regulations, which the SRA said its compliance officer for legal practice had completed “in the mistaken belief” that the firm was compliant.
It was not until spring 2023 that the firm moved into compliance, nearly six years after the regulations came into force.
The SRA said the breach persisted for longer than was reasonable, demonstrating “a pattern of non-compliance”. It was also reckless.
“The firm failed to have proper regard to the SRA’s guidance and warning notices which explained what was required, the risks that failure to comply with AML requirements posed, and the regulatory consequences of failing to comply.”
The misconduct was “serious and had the potential to cause serious harm to the public interest and to public confidence in the legal profession”.
The failures were placed in a band with a financial penalty of 1.6% to 3.2% of annual domestic turnover. The SRA placed the misconduct “towards the mid-range” of this bracket.
In mitigation, the SRA acknowledged that there was no significant harm caused by the failings, while the firm had made admissions, co-operated with the investigation and remedied the breaches.
This led to a fine of £16,052.80, plus costs of £1,350.
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