Solicitor’s inadequate AML checks led to property frauds

SDT: Solicitor did not pick up on spelling anomaly

The Solicitors Disciplinary Tribunal (SDT) has suspended the owner of a London law firm whose “failings” resulted in two fraudulent property transactions.

In the first, Nirosha Jayawardena was able to get the money back after she was alerted to the fraud, but the proceeds of the second were not recovered.

Ms Jayawardena, admitted in 2007, was sole partner and owner of Tremont Midwest Solicitors, based in central London, which specialised in immigration and conveyancing work. She employed one qualified lawyer.

In an agreed outcome approved by the SDT, the Solicitors Regulation Authority (SRA) said she acted in the sale of a property in London owned by an elderly brother and sister, Mr A and Ms A.

An imposter “purporting to be Mr A” instructed the firm in February 2019. The real Mr A had died and his sister was in a care home.

Ms Jayawardena told the caller she needed to see him and his wife with their identity documents and proof of address.

He said his wife “could not move very well and would not be able to come into the office”, so Ms Jayawardena spoke to them while they were in a taxi outside.

She obtained a driving licence, passport, TV licence and bank statement. The wife’s middle name in the passport was misspelt as ‘Annn’. “This was an obvious anomaly that anyone conducting adequate due diligence in the circumstances of this case would have picked up on,” the SRA said.

The law firm’s anti-money laundering (AML) policy required electronic AML checks, but they were not carried out.

Contracts were exchanged in early March 2019 and the sale completed two days later. Ms Jayawardena transferred the sale proceeds, which came to over £293,000, not to the couple but to a company called Hermes of Mayfair.

The day the money was transferred, Westminster Council called the solicitor to inquire about the sale and told her that Mr A had died recently, while his wife was in a council care home.

Ms Jayawardena “took immediate steps to recall the funds and was eventually able to do so in full”.

In the second case, the solicitor acted for “clients purporting to be” Mr and Ms B in the sale of a property in Kent. They “appear to have been imposters” connected with the same fraudsters involved with the first property.

Ms Jayawardena carried out AML checks in February 2019, but did not submit the ID documents as part of this. Both AML searches came back with warnings.

The solicitor claimed that she obtained the client’s driving licence as secondary ID – although there was no copy of it on file – but “even if she did obtain it, the respondent does not recall carrying out a further AML check with the information contained in the driver’s licence”.

The sale went ahead and the following month she transferred £164,900 to an account in the name of Infinity Jewels. The SRA said Ms Jayawardena had not explained why the proceeds were paid to a third party.

The Land Registry told her that it considered the copies of passports provided by the sellers to be forgeries.

The tribunal found that “as a result of Ms Jayawardena’s failings, fraudulent property transactions had taken place”.

Ms Jayawardena – who said her firm had been the “victim of fraud” – admitted failing to conduct adequate due diligence or AML checks and paying sale proceeds to unconnected third parties in breach of the accounts rules.

The SRA noted that the solicitor was repaying the sum owing as a result of the fraud. While she attempted to apply some customer due diligence measures, “she did not adequately verify or scrutinise the information that she had been provided with”.

She also failed to obtain accountants’ reports for three years and carry out reconciliations. The SRA said that, following the closure of Tremont Midwest in January 2021, it was “unable to calculate whether the firm held sufficient funds in the client bank account to satisfy client liabilities”.

A combination of lockdown, health issues and Ms Jayawardena’s decision to close her firm “led her effectively to cease any ongoing compliance with the requirements of the accounts rules”.

Ms Jayawardena also admitted failing to discharge an undertaking given to another law firm. The SRA said she agreed in January 2019 to pay the costs of a licence to assign, limited to £850 plus VAT, but the amount remained outstanding.

The SDT suspended Ms Jayawardena for a month, to begin on 3 May 2023. Conditions were imposed on her future practice, preventing her from being a law firm manager or owner or a compliance officer.

She was also banned from practising on her own, holding or receiving client money, or acting as a signatory to client account.

Further, the solicitor was required to complete a course on AML and the accounts rules within the next 12 months.

The SDT said a short suspension combined with indefinite restrictions and training reflected the seriousness of the misconduct.

Bearing in mind her limited means, the tribunal made no order for costs.

Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Will solicitors finally be fans of transparency now?

Since the introduction of the SRA’s transparency rules in December 2018, I have been an advocate for law firms going further then the regulatory essentials.

A two-point plan to halve the size of the SRA

I have joked for many years that you could halve the size (and therefore cost) of the Solicitors Regulation Authority overnight by banning both client account and sole practitioners.

Key cyber and data security questions to ask a legal IT provider

One of the growing priorities that law firms face when considering a legal technology provider is cyber and data security, such as their responsibilities and cyber incident management.

Loading animation