Anti money laundering: Misconduct was deliberate, calculated and repeated
A law firm owner who ignored anti-money laundering (AML) responsibilities – and even overrode a negative due diligence check – has been banned from holding compliance roles.
Silas Ogbonna also failed to undertake a simple internet search that would have told him that one of his clients was a politically exposed person (PEP), triggering extra obligations.
The Solicitors Disciplinary Tribunal (SDT) ruled that he cannot hold the roles of compliance officer for legal practice, compliance officer for finance and administration, money laundering reporting officer or money laundering compliance officer for three years.
He was also fined £25,000, which was then reduced by 50% due to his limited means, while the firm he owns, Topstone Solicitors in South London, was fined £15,000.
Mr Ogbonna, who qualified in 2009, was instructed on two property transactions for which he charged £2,340 plus VAT each.
In an agreed outcome with the Solicitors Regulation Authority (SRA) and approved by the SDT, he admitted that, over a period of six months, he failed to undertake sufficient due diligence on the identities of clients and parties making payments into the firm’s client account and the sources of those funds.
This was even though “indicators of a heightened risk of money laundering were present”, which meant enhanced due diligence was required.
In undertaking a digital customer due diligence/AML search, he used a manual override facility in the software to add commentary which resulted in a previously non-compliant check showing as compliant, “in circumstances where he ought to have appreciated that the commentary added did not warrant a compliant result”.
One of the clients was a politically exposed person but Mr Ogbonna failed to recognise this, even though an internet search would have “readily” identified her as such.
Instructions from clients based in a jurisdiction scoring low in the Transparency International corruption index – “and thus suggesting higher risk” – was another indicator, although it was not a high-risk jurisdiction for the purposes of the 2017 Money Laundering Regulations.
Mr Ogbonna admitted also to providing a banking facility by receiving a payment of £37,865 from one client, even though one of the transactions had been aborted, and then paying it out to a third party.
Topstone admitted not having in place an adequate risk assessment or procedures to manage the risks of money laundering, not carrying out adequate source of funds checks, and not preventing its accounts from being used as a banking facility.
In mitigation, Mr Ogbonna said his misconduct was “not intentional”. In one transaction, the client had been recommended by a “trusted agent”, with whom no previous issues had arisen.
He spoke with the client, took ID and “was not alive to the risk that she could be a PEP”, while another firm of solicitors had provided written confirmation as to the source of the funds.
In the other transaction, Mr Ogbonna took oral instructions regarding the source of the funds but agreed that they were inadequate.
The SRA accepted that, in the circumstances, a fine and a restriction order was “a sufficient sanction to mark the seriousness of the misconduct and to protect the public and reputation of the profession”.
The SDT found the solicitor “highly culpable for both his and the firm’s misconduct”, which was “deliberate, calculated and repeated”.
It added: “The lack of due diligence undertaken had the potential to open the gateway to financing terrorist activities.”
It was to Mr Ogbonna’s credit that he had a previously unblemished regulatory record, admitted his misconduct and co-operated with the SRA.
His failures amounted to “very serious misconduct” but the SDT agreed that a fine was “the appropriate and proportionate sanction”.
As he was essentially the “controlling mind” of Topstone, the tribunal said the firm was culpable “to a lesser extent”.
The pair were also ordered to pay £10,000 in costs, with Mr Ogbonna liable for £6,250.