ABS fined more than £25,000 for AML failings

A Birmingham law firm has been fined more than the Solicitors Regulation Authority’s (SRA) stated £25,000 for ‘traditional’ firms for anti-money laundering (AML) failures because of it’s status as an alternative business structure (ABS).

Tyndallwoods Solicitors, has been fined £27,813 by the Solicitors Regulation Authority (SRA) for failing to implement proper anti-money laundering (AML) measures over a seven-year period. An SRA investigation revealed that from 2017 until September 2023, the firm lacked the required risk assessment, policies, controls, and procedures mandated under AML legislation. The failings included

  • the failure to have an appropriate firm-wide risk assessment (FWRA)
  • the failure to establish and maintain fully compliant policies, controls, and procedures (PCPs) to mitigate and effectively manage the risks of money laundering and terrorist financing
  • failure to sufficiently conduct client and matter risk assessments (CMRAs) and complete ongoing monitoring or source of funds
  • failure to complete adequate Customer due diligence (CDD)

Tyndallwoods admitted to breaching SRA principles and AML laws, which the regulator said showed a “disregard for statutory and regulatory obligations.” Although acknowledging there appeared to be no evidence of harm to consumers or third parties, the outcome highlighted that the firm’s shortcomings created the potential for harm, including the risk of facilitating dubious transactions.

The investigation noted that the firm promptly implemented compliant processes after receiving feedback and cooperated fully with the SRA. Despite the mitigation, the SRA emphasised that the firm’s seven-year non-compliance exposed it to a greater risk of being exploited for money laundering, particularly in conveyancing transactions, which make up about one-third of its turnover.

The fine was calculated as 2.4% of the firm’s annual domestic turnover, resulting in an initial penalty of nearly £40,000, which was reduced in light of the firm’s cooperation and remediation efforts.

In 2022 SRA fining powers were increased from £2,000 to up to £25,000 for ‘traditional’ firms and the solicitors who work in them. For ABS’s and the individuals working in them fines of up to £250m and £50m respectively can be levied for non-compliance. At the time, the regulator said it ‘would like to be aligned with the other legal regulators, whose fining powers are not limited.’

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