The Solicitors Regulation Authority has started its promised enforcement action against firms that put off fulfilling their anti-money laundering obligations.
The regulator today published details of fines issued to six firms which took more than a year to comply with new regulations.
The three firms, each fined £800 and ordered to pay £600 costs, are Bradford practice Cartwright Solicitors, south east London firm Morrison Spowart Solicitors, the recognised sole practice of Alister Pilling, based in Camborne in Cornwall, Essex firm Fairhurst Menuhin & Co Solicitors, JE Bennett Law Ltd in Kent, and Newbury-based Charles Hoile Limited. Each has now provided the information required by the SRA about measures in place to tackle money laundering.
Sanctions relate to the money laundering, terrorist financing and transfer of funds regulations which came into force in 2017. Law firms must carry out a risk assessment to identify and assess the business’s risks of money laundering and terrorist financing.
The SRA asked all firms carrying out certain types of work to complete a declaration to confirm they had the risk assessment by the end of January 2020.
Last year, the SRA pledged to test a sample of firms’ policies each month amid concerns about some businesses not meeting their obligations. The regulator also wanted to expand visits to every high-risk firm on a three-year rolling basis, along with visiting a sample of lower risk firms.
The sanctions handed out today – which are unlikely to be the last – will serve as a warning shot to legal businesses that the regulator is not prepared to overlook non-compliance. Fines have been issued in the past for making insufficient checks on client wealth, but this is the first time sanctions have related to the 2020 risk assessment requirement.
The SRA has been clear that firms must do more to question their clients and where they obtained their money for high-value transactions, especially in conveyancing and trust management. Speaking at a conference last year, Mark Boyle, the SRA’s policy lead on anti-money laundering (AML), said it was a myth that firms need only check whether a client has a UK bank account, adding: ‘You really need to be checking how did the person get their money, be it through salary, investment or gifts. It can be many legitimate means, but you need to understand that and be evidencing that.’