Firm to pay £78k after AML case goes to tribunal

An east London firm will have to pay £78,000 after failing to meet money-laundering regulations for more than six years. 

Huggins Lewis Foskett agreed with the Solicitors Regulation Authority that it should pay a fine of £58,000 and a further £20,000 in costs. The case exceeded the maximum limit for SRA fines so it had to be transferred to the Solicitors Disciplinary Tribunal, which rubber-stamped the agreed sanction.

It was found that from 2017 to 2022 the firm failed to have a risk assessment in place and failed to have policies, controls and procedures as required. It also failed to establish an independent audit until January 2024 as the money laundering regulations required.

The tribunal heard that 80% of the firm’s work falls within the scope of the MLRs – most of that through conveyancing – and it employs nine fee earners. Turnover for 2021/22 was just over £3m.

The tribunal considered the conduct to have been very serious and could see no reason why the firm had not followed the regulations for so long.

It added: ‘Compliance with the anti-money laundering regulations is required, both in respect of meeting legal and regulatory obligations and for the wider societal issue of such compliance being a key method of potentially disrupting serious crime.

‘It was a matter of luck that the respondent had not been targeted by criminals exploiting the accepted deficiencies in its AML procedures and requirements under the regulations.’

The firm admitted all the allegations made, but pointed out that none of the breaches were intentional and it is now regarded as being compliant after changes were made. It added that risk assessments were performed on clients and matters but they were not documented in a way that could be shown to the SRA. The firm apologised and expressed regret that it fell short of the requirements.

While the SRA has significantly increased its AML enforcement activity in the last two years, it is rare that the regulator finds that a fine should be more than the £25,000 maximum it can impose (all fines are paid to the Treasury, no matter who issues them).

In May, Essex firm Tolhurst Fisher was fined £120,000 by the tribunal for prolonged MLR breaches. Where firms are classified as alternative business structures, the SRA can issue fines greater than £25,000: this has happened in relation to Simpson Thacher & Bartlett (£300,000) and T G Baynes (£64,000).