A Cambridge firm of solicitors has been fined £172,934 by the Solicitors Regulation Authority for failing to identify a client as a non-domestic politically exposed person (PEP).
The failure by Taylors Vintner LLP led to a second firm being provided with inaccurate information, having been told that the client’s identity had been verified in accordance with anti-money laundering regulations and confirmed not to be a PEP.
The significant fine was issued despite the SRA agreeing that the nature of the misconduct was ‘less serious’, not intentional, did not form a pattern and the firm had not made any financial gain.
The SRA explained in its decision:
“PEPs are high risk clients (holding positions of power and influence, making it easier to obtain funds via corruption or by stripping assets of their country of origin) and the measures as set out in the MLRs 2007 specifically had a section dedicated to PEPs, requiring additional scrutiny to be applied to mitigate the increased risk.
“The firm did not identify its client as a PEP at the outset of the transaction, and, as a result, the required actions as specified in the MLRs 2007 were not executed.”
The client appointed Taylors Vintner to act in a residential property purchase, which took place between February and June 2017. The firm didn’t identify the client as a PEP until August 2017, two months after the purchase had completed and five months after incorrect information had been shared with the other firm of solicitors.
Regulation 14(4) of the Money Laundering Regulations 2007 requires enhanced checks to be carried out when acting for a PEP, including approval from senior management for establishing a business relationship with the person in question, taking adequate measures to establish the source of wealth and source of funds, and conducting enhanced ongoing monitoring of the relationship.
‘The obligation was on the firm to comply with the MLRs 2007 and to provide accurate information to another firm of solicitors’, the SRA said.
“The firm is directly responsible for ensuring it meets its obligations and had direct responsibility for its own conduct.
“It is in the public interest that firms ensure compliance with the money laundering regulations. A failure to do so has the potential to cause significant harm by exposing the firm to the risk that its services will be used to carry out money laundering or terrorist financing. Where thorough checks are conducted, this mitigates and manages the risk and ensures that the public can take comfort that firms are complying with their legal and regulatory obligations.
“Any lesser sanction would not provide a credible deterrent to the firm and others.”
