Anti-money laundering: Absence of source of funds information
A law firm in Telford whose multiple failures raised the risk of it facilitating money laundering and terrorist financing has been fined by the Solicitors Regulation Authority (SRA).
Clarkes is to pay a fine of £2,000 and costs of £1,350 under a regulatory settlement agreement with the SRA that means it will not be referred to a disciplinary tribunal.
The regulator said the firm did not have in place a compliant AML firm-wide risk assessment until February 2022, despite having declared two years earlier that it did.
The original risk assessment failed to consider the firm’s delivery channels and its transactions, as required by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017).
The firm did not have in place compliant AML policies, controls and procedures either. Problems included an absence of source of funds information, out-of-date guidance and links, and referring to an employee who was no longer with the firm. Clarkes also failed to provide sufficient training to staff.
“In one instance, the firm failed to conduct adequate ongoing monitoring and scrutinise the transaction, including necessary source of funds checks, as required by regulation 28(11)(a) of the MLRs 2017, when £115,000 was received into firm’s client account and returned to sender following an aborted transaction,” the agreement said.
It neither conducted an assessment of the level of risk from the transaction nor had a client/matter risk assessment in place, showing a lack of “sufficient regard for the SRA’s warning notice on money laundering and terrorist financing”.
Several SRA principles and rules were breached as a result of these failures and the SRA said the conduct “showed a disregard for statutory and regulatory obligations and had the potential to cause harm by facilitating dubious transactions that could have led to money laundering (and/or terrorist financing)”.
The lack of compliance “showed an AML control environment failing at the firm”.
A fine represented “a credible deterrent to others”, the SRA said, adding there was no evidence of harm to consumers or third parties. There was now “a lower risk of repetition” after Clarkes remedied the breaches.
Also, the firm admitted the breaches, showed remorse for its actions and did not financially benefit from the misconduct.