A Mayfair firm has been fined more than £23,000 for failing to do enough checks on a potentially risky client. The Solicitors Regulation Authority found that over the course of two and a half years, Charles Douglas Solicitors acted for a foreign politically exposed person (PEP) in 194 matters.

These largely consisted of residential property transactions and refinance matters: the majority were aborted, but 56 proceeded to completion.

The SRA reviewed the firm’s files and found it had obtained ‘substantial’ information about the PEP’s sources of funds and wealth. But the firm could not demonstrate that it had taken adequate measures to check where a small fraction of the funds had come from. It also found an issue regarding the questions asked during onboarding about the wealth derived from overseas business interests.

The SRA acknowledged that the firm completed checks, but the financial statements of the overseas business interests provided by qualified overseas accountants ‘raised concerns’ as to the scrutiny applied. This is because those financial statements showed substantial revenue, minimal business expenditure and most of the net profit being paid out immediately as dividends.

The firm admitted that, while substantial and thorough checks were conducted, more could have been done.

The SRA said the firm was obliged to comply with money laundering regulations and that any failure to do so had the potential to cause significant harm.

The regulator and the firm agreed that in this case the harm or risk of harm was low, but although enhanced measures were applied, these were not fully compliant with the requirements of the MLRs 2017.

The financial penalty was set at between 0.4% and 1.2% of annual domestic turnover, and reduced to account for early admissions and full cooperation with the investigation. The firm was fined £23,588 and agreed to pay £1,350 costs.