The Solicitors Regulation Authority has been hit for costs on a high-profile money laundering case because it failed to follow its own guidance when bringing the case. 

SRA mug

In March, the Solicitors Disciplinary Tribunal dismissed all allegations brought by the SRA against Dentons, the word’s biggest firm by headcount. During a six-day hearing, the SRA had alleged that the firm breached money laundering regulations through its retention of a client from 2013 to 2017. However the tribunal found that any rule breaches had been inadvertent: the firm had relevant and responsible AML policies in place and enforced those policies.

The regulator’s costs were understood to be around £189,000 and the newly-published SDT judgment reveals that it unsuccessfully applied for Dentons to meet some of that figure.

The 90-page ruling records that the SRA argued that its allegations were properly brought and that costs were incurred after the firm applied to rely on expert evidence.

The regulator pointed out that the tribunal had found that the firm had breached the regulation requiring to take steps to establish the client’s source of funds (although this had not ultimately amounted to misconduct being found). This, the SRA submitted, was an ‘important yardstick’ for the profession and the organisation.

But Dentons argued that the SRA had not taken into account Law Society practice notes on AML and did not follow its own guidance from the period in question when bringing the prosecution. The regulator itself had judged Dentons in 2014 to have ‘gold standard’ systems and controls, so it could not realistically make any criticism of the firm now.

The tribunal ‘agreed in full’ with the firm’s submissions and found arguments about the significance of this decision ‘not to the point’.

‘It did not follow that the firm, having been found not culpable, should, in some way, have to pay costs for the SRA to make a point to the profession,’ added the tribunal. The allegations were dismissed in full and no order for costs was made.


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