The Solicitors Regulation Authority continues its crackdown on AML breaches, with announcements that five firms have been fined a total of £118,000 for not following money laundering rules.
The largest fine was handed to T G Baynes Solicitors, of Bexleyheath in Kent, who were ordered to pay a financial penalty of £63,869 and costs of £1,350 for failing to establish and maintain policies, controls and procedures (PCPs) and failing to conduct client and matter risk assessments (CMRAs).
The size of the fine was related to the seriousness of the offences, the SRA said, but was reduced by 30% in recognition of mitigating factors including cooperating fully with the investigation, bringing itself fully into compliance, and no harm having been done as a result of the breaches.
GA Solicitors in Plymouth were fined £25,000 for AML control filings in relation to CMRAs and source of funds in conveyancing transactions. The SRA said the agreed outcome was proportionate despite no evidence of harm because conveyancing is a high-risk area and the financial penalty acts as a credible deterrent.
In London, Cruickshank Limited was fined £16,984 for failing to have a firm-wide risk assessment (FWRA) in place. Announcing the decision, the SRA said:
“The conduct showed a disregard for statutory and regulatory obligations and had the potential to cause harm, by facilitating dubious transactions that could have led to money laundering (and/or terrorist financing). This could have been avoided had the firm conducted appropriate risk assessments on its clients and files, on in-scope matters.”
Amory Glass & Co in Wembley and A.S.K Legal in Buckinghamshire were each fined over £6,000 for a range of breaches including a lack of FRWAs and PCPs and failing to maintain appropriate and risk-sensitive policies and procedures.
In a webinar last month, the SRA said CMRAs ‘was by far the largest area’ for referrals, following by PCPs, concerns around source of funds checks and FWRAs.
The prolific penalties have led some to question whether the fines should be viewed as a cost of business for solicitors. Brian Rogers, regulatory director at Access Legal, suggested that T G Baynes Solicitors would have been better off by more than £400,000 over six years by simply ignoring AML obligations and focusing on fee earning.
Stressing that he was not promoting non-compliance, Rogers explained:
“Based on figures I have used in previous posts (£300ph x 5 hours pw), this firm could have been better off by over £400,000 over the six years for ignoring its AML obligations and focusing on fee earning (as with previous firms, I am not saying this firm actively chose non-compliance over compliance).
“Even if the figures were £300ph x 1 hour pw, the firm would still have been £29,600 better off being non-compliant over the six years!”
Last month, the SRA said enforcement activity had increased ‘probably by around 100%’ in the 2023/24 financial year due to a renewed focus on inspections and an increase in staffing numbers.
Investigations manager Tracey Bourne explained:
“This isn’t because of a significant increase in lack of compliance across law firms. In fact, it’s probably the opposite. We’re seeing overall an improvement in AML control. It’s because of an increase in on-site inspections.”
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“Last month, the SRA said enforcement activity had increased ‘probably by around 100%’ in the 2023/24 financial year due to a renewed focus on inspections and an increase in staffing numbers”
You could also mention that enforcement activity has increased at a time where the SRA’s coffers took a beating due to the Axiom Ince scandal in October 2023. I wonder how much the fines have contributed to making up the shortfall?
@Anonymous – fines are paid to the Treasury.