AML: Solicitor is now his firm’s MLRO
A solicitor who failed to spot red flags for potential money laundering while acting on two loans worth £464,000 has been fined £15,000.
However, the Solicitors Disciplinary Tribunal (SDT) approved an application by the Solicitors Regulation Authority (SRA) to withdraw an allegation of manifest incompetence, on the grounds that there was not a “complete abdication of responsibility” by Paul Edmund Levy.
Mr Levy argued, in mitigation, that there were no allegations of dishonesty or recklessness and he was himself “deceived and manipulated by sophisticated criminals”. His “sole failing was not spotting the fraud”.
The solicitor admitted failing to identify or respond to “one or more” indicators of fraud and/or money laundering.
He also admitted that he had “caused or materially contributed” to the failure of the London law firm where he worked at the time, Singhania & Co, to comply with the Money Laundering Regulations 2017 (MLRs).
The SDT said: “By his failings and whether or not his actions were deliberate, Mr Levy effectively facilitated transactions that bore hallmarks of fraud and/or money laundering.”
The tribunal heard that Mr Levy, who qualified in 1999, was a solicitor and consultant at Singhania & Co, prior to its closure at the end of 2021.
He was fined £5,000 by the SDT in July 2022, and ordered to pay £7,500 in costs, for accounts rule breaches.
His latest misconduct concerned two unregulated loans “taken out by individuals with reference to properties they owned, with high interest and short repayment periods”.
Mr Levy was instructed in September 2019 to act on a purported loan of £199,000 to Person A.
“The solicitors acting for Person A changed without explanation mid-transaction. Mr Levy was asked to send the loan moneys to a trust corporation and two persons who were not the borrower, and not to a solicitor’s client account, as stipulated in the facility agreement.”
Two months later, Mr Levy was instructed by another client over a loan of around £265,000 to Person B.
The tribunal said: “The solicitors ostensibly acting for Person B were imposters. Mr Levy was asked to send the loan money to a company which was not the borrower and not to a solicitor’s client account, as stipulated in the facility agreement.”
Mr Levy’s failings “led directly to complaints of identity fraud, impacting not just on his clients but the ultimate victims, Person A and Person B”.
In his mitigation, Mr Levy said he had wrongly relied on due diligence done by another person with whom he had completed multiple transactions over many years and was personally financially exposed. He accepted that this was “a fundamental error of judgement”.
The SDT noted that, while Mr Levy had accepted responsibility, he had “persisted in apportioning some of the blame to others”. He had also “failed to learn from the previous time he had appeared before the tribunal”.
An experienced solicitor, he had full control of his actions and “where there were red flags, he should have asked the right questions”.
The solicitor “should have been alerted to fraud and/or money laundering by the fact that both loans had high interest rates and short repayment periods”.
The tribunal accepted that Mr Levy had “shown a level of co-operation” with the SRA and demonstrated “a degree of insight into his misconduct”.
He said he had undertaken substantial AML training – “although he had failed to provide any certificates of training” – and indeed was now the money laundering reporting officer for his current firm.
Mr Levy was fined £15,000 and ordered to pay costs of £35,300.
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