AML: Policies not updated for years
Two law firms that have not had their anti-money laundering policies in order for several years have been fined by the Solicitors Regulation Authority (SRA).
East London firm Westgate Solicitors was fined £9,750 and Middlesbrough practice Miles Hutchinson & Lithgow £3,203, with each paying costs of £1,350.
Westgate took remedial action after the SRA assessed its compliance last year, but the investigation identified several areas of non-compliance before that point in breach of the Money Laundering Regulations 2007 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
It failed to have in place a firm-wide risk assessment or appropriate policies, controls and procedures (PCPs) to mitigate and manage effectively the risks of money laundering and terrorist financing.
Further, it did not establish an independent audit function with the responsibility to examine and evaluate the adequacy and effectiveness of its PCPs, or conduct adequate client and matter risk assessments on 19 client files.
The SRA said a fine was appropriate, explaining: “For a long period of time the firm failed to have proper regard to the SRA’s guidance and warning notices which explained what was required, the risks that failure to comply with AML requirements posed, and the regulatory consequences of failing to comply.
“The firm was responsible for its own conduct which was serious and had the potential to cause harm to the public interest and to public confidence in the legal profession.”
The SRA’s fining guidance scored the misconduct such that the figure should be between 1.6% and 3.2% of the firm’s turnover.
“In light of mitigating factors, including the fact that the firm was now in compliance with the [2017 regulations], had made some admissions and had co-operated with the investigation process, the firm’s conduct was placed towards the bottom end of this bracket.”
Miles Hutchinson & Lithgow, meanwhile, also did not have a compliant firm-wide risk assessment or PCPs in place dating back to 2017.
The firm had completed an online declaration in January 2020 to say that it was compliant with the 2017 regulations.
The SRA said: “This form had been completed by the firm’s compliance officer for legal practice in the mistaken belief that the firm was compliant when it was not. Lastly, it was found that the firm could not provide evidence of any training given to the staff undertaking ‘in-scope’ work.”
The firm provided some PCPs in February 2023 but these were not fully compliant until December.
The misconduct led to the same penalty band linked to its turnover and was placed at the bottom end due to the mitigating factors.
