SDT: Reckless disregard of risk of money laundering
A solicitor who let his firm’s client account be used as a banking facility for payments from clients’ investors totalling over £4.6m has been fined £15,000.
The Solicitors Disciplinary Tribunal said Matthew Guy Himsworth had “acted in reckless disregard of the risk of money laundering” in allowing his client account to be “repeatedly used” as an escrow service.
It said Mr Himsworth’s misconduct was aggravated by his “failure to verify the identity of paying third parties”.
He also failed to check the investors’ source of wealth or the source of funds.
In mitigation, the profit costs charged by the solicitor were “minimal”, he had not attempted to hide any of transactions and co-operated with the Solicitors Regulation Authority (SRA).
The tribunal heard that at the time of the misconduct Mr Himsworth, admitted in 2004, was director of Himsworth Scott, formerly Himsworths Legal.
A report was sent to the SRA in July 2019, “raising concerns about a brochure for an investment scheme, which appeared to indicate that the firm would hold investors’ funds by way of an ‘escrow’ service”.
In an agreed outcome with the regulator, approved by the tribunal, the SRA said that between 2017 and 2019, Mr Himsworth agreed to act on behalf of companies A, B and C in respect of investment schemes. He was introduced to them by a single contact, Client D.
The firm was retained by Company A in May 2017 to provide intellectual property and trade mark advice, such as draft user terms and conditions and draft privacy and cookie policies.
Early in the retainer, Client D had explained to Mr Himsworth that Company A was a start-up and investors “would like to invest through Company A’s lawyers”.
He took advice from an unidentified compliance service that warned the solicitor there needed to be an underlying legal transaction to justify payments into and out of the firm’s client account.
Between July and December 2017, 16 investors paid funds totalling £200,000 into the firm’s client account.
Mr Himsworth was instructed by Company B in January 2018 to provide advice on its memorandum and articles, and it later provided some other legal services charged at £2,600.
He was told its investment scheme “related to ‘the operation of crypto-mining facilities which produce a variety of cryptocurrencies” and required a minimum investment of £10,000.
Between January 2018 and January 2019, the firm received £3.89m into its client account from 177 investors.
In May 2019, the law firm was retained by Company C to provide advice on contracts and agreements. The company told Mr Himsworth it operated an investment scheme in relation to “a commodity”.
Between June and September 2019, funds totalling £542,400 were received into the client account from 20 individual investors.
The SRA said the law firm did not have direct contact with investors apart from receipt of payments. Identification documents were provided to the firm by the companies but were not certified by any third party.
Mr Himsworth admitted allowing the payments to be made in and out of his firm’s client account in the absence of an underlying transactions.
In mitigation, not endorsed by the SRA, Mr Himsworth said he set up Himsworths Legal when he was only eight years qualified and he retained “external experts in compliance and accounting”.
He admitted the allegation at the “first available opportunity” and relinquished his compliance officer and money laundering reporting officer roles.
The solicitor was fined £15,000 and ordered to pay costs of £15,000. For a period of three years, he was banned from acting as a sole practitioner or manager of a law firm, and from being a signatory on client account or a compliance officer.
