A solicitor acting in a property transaction has admitted not following anti-money laundering procedures because her client was a partner at a large international law firm.
Sandra (Sandy) Ann Mitchell conceded the status of the client “led her to believe the transaction, as a whole, was low risk”, according to a regulatory settlement agreement published today by the Solicitors Regulation Authority (SRA).
She has been fined £2,000 by the SRA and will not be referred to a disciplinary tribunal as a result.
Ms Mitchell is a non-member partner at Veale Wasbrough Vizards in Bristol. She was instructed to act in a residential conveyancing transaction worth £3.2m, which completed in January 2019, where a significant proportion of the completion funds (net of a mortgage) of £1.6m was being gifted by a relative of the client.
The relative lived in south-east Asia and Ms Mitchell failed to carry out customer due diligence checks on her and the source of the gifted funds – which turned out to be a trust in another country in the region – and to verify who the ultimate beneficial owner of that trust was,
Ms Mitchell also did not follow the firm’s procedures, failing to complete “adequately or at all” its internal money laundering form and property fraud questionnaire.
Further, had she properly answered the AML risk questions on the Intapp system used by the firm for client onboarding, it would have returned a higher risk score requiring further investigations.
The SRA said that, by failing to obtain documentary proof of the deposit funds, Ms Mitchell also breached the Mortgage Lenders’ Handbook, while the failure to document the presence of the gift itself breached the requirements of the mortgage offer.
The agreement continued: “The SRA acknowledges, in terms of mitigation, that the conveyance was completed on behalf of the client who is also a solicitor of England and Wales, and as such more reliance was placed on the probity of that client because of the client’s status as a solicitor.
“The client is a member (partner) of a leading international law firm, whose personal financial circumstances, based on earnings alone, would ordinarily indicate that the client could afford to purchase such a property with a mortgage, and consequently no immediate ‘red flags’ were identified by Ms Mitchell requiring further investigations.
“Further, in terms of mitigation, retrospective customer due diligence has been performed at the request of the SRA, and there is no reason to suspect that any dubious transactions, which bear the hallmarks of money laundering, have taken place.”
The SRA’s fining guidance indicated a bracket of £1,001 to £5,000. Here the misconduct was “neither severe enough to be at the top of the bracket, nor trivial enough to be at the bottom of the bracket”.
It determined the fine at the mid-point of £3,000, and then reduced it by a third to reflect the mitigation and Ms Mitchell’s co-operation with the SRA’s investigation and early concessions.
The regulator said the figure was appropriate because “the conduct was reckless and showed a disregard for statutory and regulatory obligations, had the potential to cause harm by facilitating a dubious transaction that could have led to money laundering and because Ms Mitchell had direct responsibility for the conduct, which could have been avoided had she followed existing processes in place at her firm”.
It was, the SRA continued, “a credible deterrent” to others but also recognised there was no evidence of lasting harm to consumers or third parties.