The Solicitors Regulation Authority has failed to overturn a tribunal’s decision to clear a solicitor on charges of failing to follow its money laundering rules after a judge heard of an error on his firm’s external search system.
George Fahim Sa’id assisted a wealthy Iraqi family in a conveyancing transaction involving two transactions for the purchase of a £27 million hotel and an £8.5 million house, both in London.
One of the members of the family, who the judge has anonymised to protect legal professional privilege, was a minister in the Iraqi government and who was therefore classed as a politically exposed person (PEP) under money laundering regulations, the court heard. The SRA said Sa’id, a sole practitioner operating as George Anthony Andrews, should therefore have carried out an enhanced due diligence check.
Sai’id accepted that his money laundering systems had let him down on the two transactions. He had made inquiries and was satisfied that his client was not a PEP, a family member of a PEP or a close associate of a PEP. The court heard that this failure meant the money laundering risk was categorised as medium when it should have been high.
Sa’id said that the PEP questionnaire was conducted by a company called Veriphy and a Veriphy printout showed the client as a 'pass'.
The Solicitors Disciplinary Tribunal had found that the due diligence conducted by Sa’id was sufficient in the light of the his prior knowledge of his clients, whom he had known for over 20 years and whose business affairs, intentions and family assets he knew much about, though he was unaware of any political involvement, ambition, or interest.
After the tribunal cleared Sa’id of any wrongdoing, the SRA appealed the decision to the High Court.
Rory Dunlop KC, for the regulator, argued the SDT had failed to give adequate reasons for its decision to dismiss the allegations.
Mrs Justice Thornton said that, although Sa’id had ‘admitted failings in due diligence’, it was entirely consistent for the SDT to conclude that those facts did not establish that his firm’s systems were inappropriate or that the due diligence conducted had been inadequate. ‘The respondent had a system which, in general, worked adequately’, the judge said. ‘The court was also taken to guidance in force at the time which indicated that the respondent had gone beyond the requirements of the guidance in subscribing to an external search service.’
She noted that it was common ground that the failure to identify the PEP connection was an error on the part of the external search service.
The SRA’s appeal was dismissed.
