The Solicitors Regulation Authority has begun spot checks on firms named in parliament as working for Russian oligarch clients. In his report to the SRA board ahead of last week’s meeting, chief executive Paul Philip revealed that the regulator had responded to allegations that lawyers are helping individuals included on the sanctions list to seek a defence. MPs have also alleged that firms are not conducting proper checks on clients, or are threatening litigation in a way designed to stifle public debate.
The SRA has been regularly mentioned during debates as MPs ask what measures are being taken to investigate and penalise those in breach of their regulatory duties. There is no suggestion that any wrongdoing has been found, but Philip was keen to stress that these allegations were not being ignored.
He said the regulator has written to those making allegations in parliament asking for further information in order to investigate any potential misconduct.
Firms have been reminded of their obligations to comply with anti-money laundering requirements and City firms contacted in particular to make sure they understand their obligations.
Philip also stated that the SRA has started visits involving a sample of firms to assess their compliance with financial sanctions. Practices named in the parliamentary debates will be picked out for spot checks and inspections.
Philip added: ‘We expect that this will continue to get significant attention in the coming weeks with further announcements from government expected on economic crime legislation and the sanctions regime.’
The SRA admitted there will extra costs for this work which will need to be covered in this and next year’s budgets. The main costs will be in setting up a system to check firms’ clients against the financial sanctions list.
Several firms have been named by the Foreign and Commonwealth Office as providing legal services to Russian oligarchs and entities, although there is no suggestion that these have acted improperly or unlawfully.
Last month the government was told to ‘toughen up’ the SRA by Conservative MP Bob Seely during a debate in parliament. Seely said he had been told by whistleblowers working for big firms that they do not do proper client checks and that ‘know your client’ systems were ‘non-existent’. He added: ‘Some actually have a list of people that they specifically do not do those checks on because they know that they are inherently corrupt and inherently criminal.’ The SRA said it would contact Seely asking for any evidence of misconduct.
This article is now closed for comment.