Fine: One of the largest penalties issued by the SRA to date
A law firm that failed to identify that the beneficial owner of its client was a politically exposed person (PEP) has been fined £173,000 by the Solicitors Regulation Authority (SRA).
Cambridge-based Taylor Vinters no longer exists, having merged with London firm Mishcon de Reya in 2021 and been fully absorbed in 2023; the misconduct predates that.
It has struck a regulatory settlement agreement with the SRA and the size of the fine reflects the fact that it was an alternative business structure, meaning the £25,000 limit on the SRA fines for traditional firms does not apply.
The agreement said that, between February and June 2017, the firm acted for a company associated with a non-domestic PEP in a residential property purchase.
Under the Money Laundering Regulations 2007, senior management had to approve establishing the business relationship with the PEP, the firm had to take adequate measures to establish the source of wealth and source of funds involved, and it then had to conduct enhanced ongoing monitoring of the relationship.
However, Taylor Vinters did not do any of this as it did not identify the client as a PEP until August 2017, two months after the purchase had completed.
Indeed, in March 2017, it confirmed to another law firm that it had verified the buyer’s identity in accordance with regulations and that the buyer was not a PEP.
Taylor Vinters admitted failing to identify the PEP and providing “inaccurate information” to another firm of solicitors.
A fine was the appropriate sanction, the SRA said. Applying its fining guidance, the regulator decided that the nature of the misconduct was “less serious”, as it was not intentional, did not continue after it came to light and did not form part of a pattern.
The risk of harm was medium: “PEPs are high risk clients (holding positions of power and influence, making it easier to obtain funds via corruption or by stripping assets of their country of origin) and the measures as set out in the MLRs 2007 specifically had a section dedicated to PEPs, requiring additional scrutiny to be applied to mitigate the increased risk.”
This led to a fine in the bracket of between 0.4% and 1.2% of Taylor Vinters’ annual domestic turnover. The notice did not specify the precise percentage settled on but, based on its last turnover, it generated a basic penalty of £247,048, which was reduced by 30% to £172,934 “to account for early admissions and full cooperation with our investigation”.
Taylor Vinters also agreed to pay the SRA costs of £1,350.
A Mishcon spokeswoman said: “The SRA has announced a fine against Taylor Vinters relating to errors made in 2017 under their legacy systems. We are pleased the SRA reduced its basic fine to account for early admissions and full cooperation with the investigation.”
Mishcon de Reya is no stranger to hefty SRA fines itself, having agreed in 2022 to pay £232,500 over multiple breaches of anti-money laundering rules – which was the largest ever levied by the SRA until earlier this year.
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