Another batch of fines relating to firms not able to show they were complying with anti-money laundering regulations has been announced by the Solicitors Regulation Authority. 

Duffield Harrison LLP, based in Hertfordshire, received the biggest fine of £25,000 – the maximum that can be imposed by the SRA.

The regulator had assessed six client matters and found the firm failed to adequately conduct client risk assessments for each. The firm also failed to maintain records of its risk assessment, so was unable to show the extent of the measures it had taken to meet the regulations.

The SRA said the firm has since demonstrated that risk assessments were being done on files, since at least 2012, albeit were not present on the six files selected for review. A new fully compliant policy for risk assessment has now been put in place and communicated to all fee earners.

The SRA acknowledged that the firm apologises unreservedly for the breaches, which were not deliberate, and has invested in appropriate support to ensure there is no repetition of the breaches. There was full co-operation throughout the investigation process and no evidence that the shortcomings caused any loss or damage or allowed the firm to represent someone involved in money laundering.

After a discount was applied to the fine for mitigation, the recommended penalty came to £26,359. The SRA agreed to reduce it further to £25,000 to avoid the ‘wholly disproportionate’ step of taking matters through the Solicitors Disciplinary Tribunal.

‘A referral to the Solicitors Disciplinary Tribunal at this late stage, after full and frank admissions have been made, would only increase the time, cost and delay, and it would not serve the public interest to do so,’ added the SRA.

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Other AML-related fines announced yesterday have been issued to The Commercial Law Practice in Dorchester (£11,579), Burch Phillips & Co from west London (£3,370) and Steinbergs Solicitors from Liverpool (£3,778).

In each case there was no evidence of harm to consumers, a low risk of repetition and full cooperation from the firms involved.

The fines were issued as new evidence emerged that small firms are more likely to come under scrutiny by the SRA regarding AML obligations.

Data obtained by client due diligence platform Thirdfort showed that firms with 20 or fewer fee earners account for 55% of proactive inspections, 74% of desk reviews, and 86% of enforcement actions taken by the SRA in 2023/24.

Harriet Holmes, senior manager at Thirdfort, said: ‘Over the past year, small firms are more likely to have come under SRA scrutiny regarding their AML compliance. This may relate to a lack of in-house resources at the law firm when it comes to compliance, where many lawyers at small firms will be juggling fee earning and compliance requirements. It may also relate to the areas in which these firms operate. For example, the SRA has flagged areas such as conveyancing as facing increased risk.’

The SRA says it takes a risk-based approach to AML supervision and that smaller firms are more likely to be flagged up as requiring a visit because they will not have specialist compliance teams in place.

The regulator added: ‘We visit more firms rated as high risk, but we also visit low and medium-risk firms. Just because we are visiting does not necessarily mean we consider your firm to be high risk of being a target for money laundering.’