According to new research, the Solicitors Regulation Authority (SRA) has ramped up the frequency and harshness of sanctions for money laundering breaches in the past 12 months.
In the first quarter of 2024, there were ten decisions on AML breaches and since the beginning of October 2023, 20 law firms have been fined for failure to comply with money-laundering regulations.
The decisions come as the SRA flexes its new fining powers, with at least ten decisions on AML breaches in the first quarter of 2024 alone. These cases saw fines of almost £170,000. With the trio of fines in April, the average AML fine for a small or medium sized law firm falls between £10,000 to £25,000.
The cases revolved around a failure to property conduct due diligence on clients and third parties and failing to properly assess matter risks. Due diligence was not carried out on funds coming from other jurisdictions and enhanced due diligence wasn’t done, nor was due diligence completed before accepting funds, and firm AML policies controls and procedures were not fully in place.
There has been further reform to the SRA’s approach on financial penalties which came into force in the middle of last year. For all firms, where a fine is to be imposed, the decision maker will now usually determine the penalty as a percentage of annual domestic turnover, up to a maximum of 5%. The idea of this was to create a penalty which would be likely to deter any repetition by the same firm or others, and to uphold public confidence in the profession.
Tim Barnett, CEO of Credas Technologies comments: “The SRA has made no secret of its mission, partly brought on by pressure from the government, to crack down on firms who do not have adequate systems in place to prevent money laundering.
“Failure to manage and demonstrate robust Anti-Money Laundering compliance can potentially result in severe penalties, including fines, reputational damage and even imprisonment for senior management, company executives or directors.
“Our technology enables firms to perform Anti-Money Laundering checks in real-time and confirms the ID document matches the individual. The Credas ID document and identity verification solution has been developed using next-generation facial recognition technology.
“By working with a wide range of leading commercial data suppliers, we offer comprehensive checks on individuals and can verify against over 2,500 different types of identity documents from around the world.”
Credas Technologies has processed 2.3 million people through its platform in the last 12 months alone – that’s about 1 in 20 adults in the UK aged 18-65 in just a year.
