A pioneering virtual law firm has been fined £68,000 after allowing millions of dollars to pass through its client account with no link to any legal work.
Scott-Moncrieff and Associates, founded by former Law Society president Lucy Scott-Moncrieff, was sanctioned by the Solicitors Regulation Authority after its conduct gave rise to a ‘serious risk’ that the client account could be used for money laundering.
According to an SRA decision notice published yesterday, a consultant at the firm acted for a Russian client over the purchase of an asset for $CA22.5m (around £12m) from a company in Canada.
The firm agreed to provide escrow services and general advice to the client but it did not act in the sale and purchase agreement for the asset and there was no need for it to receive or make payments relating to that underlying transaction.
The SRA began an investigation in October 2023 and it was found the firm’s AML documentation was not compliant with money laundering regulations. During the period when the payments were being made, the firm did not have in place a compliant risk assessment and had failed to establish and maintain policies, controls and procedures to mitigate and manage the risks of money laundering.
The firm was also found to have allowed payments into and out of its client account, resulting in its client account being used to provide banking facilities.
The SRA said: ‘The firm allowed a substantial sum to be processed through its client account when there was no proper connection between the legal services it provided and the payments it was asked to make and receive in breach of the SRA Accounts Rules 2019. This also gave rise to the serious risk that its client account may have been used for money laundering, terrorist financing or other illegal or improper purposes.’
The fine was set at 2% of the firm’s annual domestic turnover. The SRA was able to issue a financial penalty in excess of its £25,000 limit because Scott-Moncrieff and Associates is an alternative business structure. The firm was also ordered to pay £1,350 costs.
