Around half of compliance officers in law firms have admitted to feeling overwhelmed by the demands placed on them, as news emerged of another significant fine for breaching money laundering regulations.
The Solicitors Regulation Authority announced that it had fined Gordons Partnership £77,784 for failing to comply with the rules on client checks for three years until November last year.
Investigators found that the firm failed to complete an appropriate client and matter risk assessment on all six of the files reviewed. The firm had also not carried out an independent audit and had not maintained fully compliant policies and procedures. The SRA said the issues identified had the potential to cause ‘significant harm’ as the firm, based in London and Guildford, undertakes up to a third of its work in scope of money laundering regulations.
The regulator added: ‘The firm recognises that it failed in its basic duties regarding statutory money laundering regulations and regulatory compliance, as identified during our inspection and subsequent investigation.’
It was acknowledged that Gordons Partnership cooperated fully, admitted the breaches, showed remorse and remedied the breaches, to the extent that there is a low risk of repetition. There was also no evidence of any harm to consumers or to third parties and the firm made no financial gain from its conduct.
The fine level was set at between 1.6% and 3.2% of annual turnover, resulting in a basic penalty of £111,000. This was reduced to take account of mitigating factors. The SRA is able to issue a fine above its £25,000 limit because Gordons Partnership is an alternative business structure.
The latest sanction continues a trend of the SRA issuing frequent and severe penalties for breaching AML regulations.
A survey of 150 senior compliance leaders by client due diligence platform Thirdfort shows the toll this is taking on those tasked with safeguarding their firms. Respondents said demands on them were increasing but in some cases firms were devoting fewer resources to compliance.
Around one in 10 said that work related to AML had negatively affected their mental health at least four days a week for the last year. More than two-fifths said this was happening two or three days a week.
Around 40% of compliance leaders said they had to work overtime at least once a week to handle AML issues, with 35% describing their situation as ‘overwhelming’ and 12% saying work was ‘completely unmanageable’.
Just 2% said that colleagues elsewhere in the firm completely understand the role of a compliance officer, with 17% saying they felt regarded as a block on the business’ success.
Around half of respondents said compliance is not respected within their firm, and only 15% believe their work is perceived as critical and valued. Almost as many compliance leaders expect their firm to decrease investment in compliance as increase it (38% compared to 40%).
Olly Thornton-Berry, chief executive at Thirdfort, said: ‘The compliance burden on law firms continues to increase. Compliance leaders are doing their best and often going above and beyond to meet these regulatory requirements. However, fighting fraud and money laundering shouldn’t require regular overtime and negatively impact your personal life.’
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