A solicitors who recklessly exposed his firm to the risk of money laundering has been fined £12,500 by the Solicitors Disciplinary Tribunal (SDT).
The SDT heard that Amit Kumar Manibhai Patel only found out that his firm had received seven payments from a third party, worth over £300,000, after he was contacted by the police.
Approving an agreed outcome between Mr Patel and the Solicitors Regulation Authority (SRA), the tribunal heard that West Yorkshire Police was investigating the source of payments into the client account of Mr Patel’s firm, Manis, based in south London, in March 2016.
He qualified in 1988 and had been a sole practitioner since 1997.
Mr Patel’s bank told him, later that month, that seven of the 10 payments came from ‘AP’, though AP did not feature in any of the documents in the share purchase transaction involving his client, ‘BP’.
The source of two further payments could not be identified, and the other came from ‘PT’, a longstanding friend of Mr Patel and the person who had put him in touch with BP. The share purchase ultimately failed.
The sole practitioner distributed the funds in client account, sending over £497,000 to BP, even though the money had not come from him.
The SDT said: “[He] had permission from one of the third parties to send £200,000 to Mr BP. There was no permission relating to the remaining £297,490 returned to Mr BP.”
Mr Patel admitted failing to make enquiries about the source of third-party payments and the identity of AP, whom he did not know.
“Similarly, payments from Mr PT at that particular time should have raised concerns as the [Mr Patel] been informed that the initial monies were coming from Mr BP.”
The fact that the email chain showed that the £200,000 paid into client account by PT “had originated from Mr BP” should have raised “concerns and suspicions” as well.
Mr Patel admitted failing to have sufficient regard to his duties under the Money Laundering Regulations 2007 and the SRA’s warning notices on money laundering.
He also failed to pay due regard to due diligence; although Mr Patel said he saw BP’s original passport and utility bill, the copies were not certified and there was no date, stamp or note as to when and who had taken the copies.
Mr Patel also did not ask about a £2,000 overpayment the utility bill had shown that BP had made, given that he only owed £60.
He admitted that his conduct was reckless in that it risked involving his firm in money laundering, and that he had failed to obtain authority from third parties for the money transferred to BP, failed to be alert to warning signs outlined in SRA warning notices, and failed to obtain information and consider whether a suspicious activity report (SAR) should be made.
Mr Patel, as sole principal of Manis and its COLP and COFA, accepted that there was inadequate guidance on money laundering in the firm’s practice manual.
In mitigation, he made early admissions of guilt, and pointed out that this was his first disciplinary offence.
Mr Patel said he had a medical condition during the transaction, resulting in his admission to hospital for two weeks in August 2014 and a “long rehabilitation”.
The tribunal said Mr Patel’s culpability was high, as he was “directly responsible for ensuring money laundering compliance” and his conduct risked his firm’s client account “being abused for money laundering purposes”.
He was ordered to pay a fine of £12,500 and costs of £9,100.