Baku, Azerbaijan: Client was a PEP
A solicitor who failed to undertake proper anti-money laundering (AML) checks on a client who was a politically exposed person (PEP) and also allowed him to use his firm’s client as a banking facility, has been fined £32,500.
Rory Peter Heddle Fordyce also used Taylor Fordyce’s client account as a banking facility of his own, with £639,000 passing through it over a period of eight years.
Having qualified in 1979, he was manager and director of the Winchester-based firm, as well as its COLP, AML compliance officer from 2012 and reporting officer from 2018.
The Solicitors Disciplinary Tribunal (SDT) heard that he had acted for Anar Mahmudov, son of Azerbaijan’s former minister of national security Eldar Mahmudov. It was common ground that he was a PEP.
His father was the subject of press coverage in 2020, when The Guardian reported that the family owned a business and property empire worth €100m. His mother-in-law, Zamira Hajiyeva, was reported to have spent over £16m on shopping trips to Harrods between 2006 and 2016, and in 2018 became the first person made subject to an unexplained wealth order.
Mr Fordyce admitted breaking the regulations by failing to take adequate measures to establish the source of wealth and funds for £1.1m received into the client account from Mr Mahmudov, and a further £1.9m received from his sister.
The SDT found the steps taken by Mr Fordyce to be “rudimentary, piecemeal and naïve”.
Mr Fordyce admitted only failure to comply with regulatory obligations. The SDT found that he had also failed to maintain public trust and to run his business effectively and in accordance with proper governance, financial and risk management principles.
He had denied providing a banking facility in relation to the £1.1m, but the tribunal described his explanations about ‘underlying transactions’ to have been “inconsistent, vague and lacking coherence”.
“He was unable to say what the specific legal transactions being undertaken were, such that it was permissible to transfer the monies. For the most part, Mr Fordyce was only able to identify general intentions as justifications for the use of the firm’s client account.”
The solicitor also admitted, between 2014 and 2022, using the firm’s client account as a banking facility for his own personal payments. Totalling £638,800, they related to “personal tax issues, personal loan repayments, payments to a former manager of the firm, car repairs and other personal matters”.
Counsel for the Solicitors Regulation Authority said Mr Fordyce had done this “freely and openly”.
He told the tribunal it would be difficult “to imagine another case where such a flagrant breach of the accounts rules would point to an obvious failure to act in accordance with proper governance and sound financial and risk management principles”.
However, the tribunal rejected an allegation that Mr Fordyce broke the rules by accepting a loan of £250,000 from Mr Mahmudov at a time when the law firm was in “difficult financial circumstances” and had an overdraft of over £124,000 – a loan that was not repaid.
The SDT found that, although there was a risk of a conflict, in the circumstances – where the firm was not doing much work for Mr Mahmudov and the loan was to Mr Fordyce personally, although he put it towards the firm – it did not amount to one.
In an email to Mr Fordyce cited by his counsel, Mr Mahmudov said: “I did not need to take legal advice in connection with my personal loan to you as I am used to making such loans to friends and family and, as you know, I have considerable commercial experience because of the many international businesses I control or in which I am an investor.”
The SDT rejected another allegation from the SRA that Mr Fordyce broke the rules, this time by loaning £138,000 to a person whose company was a client. As the allegation was predicated on him being a client, it failed.
In mitigation, the solicitor’s counsel argued that no third party had been harmed by the matters found proved, nor had any client monies been misused – there was no money laundering. Mr Fordyce had “adopted a casual approach but to his own monies”.
In deciding sanction, the SDT said that “whilst Mr Fordyce was not motivated by direct personal gain to commit misconduct, his misconduct arose as a result of his prioritising expediency and convenience over compliance with his regulatory obligations”.
He “subordinated [his AML] duties to his desire not to jeopardise the transaction for an important client”.
But he had also shown “a degree of insight” and undertaken AML training.
The solicitor was fined £32,500 and ordered to pay costs of £50,000.
Conditions were imposed on his practising certificate for five years preventing him from being a sole practitioner, COLP or COFA, an AML compliance or reporting officer and from being a signatory on client account.
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