Midlands firm fined £46,000 for AML shortcomings

A Midlands firm has agreed to pay a fine of more than £46,000 for failing to comply with anti-money laundering regulations despite the absence of any resulting harm. 

Coventry-based Band Hatton Button admitted failing to comply with AML regulations following amendments in 2017, the Solicitors Regulation Authority said. It set a penalty of 1.6% of annual gross income. The regulator was able to exceed its £25,000 fining limit because the firm is an alternative business structure.

An SRA inspection found Band Hatton Button did not meet money laundering regulations set out in 2017 by not having a firm-wide risk assessment and failing to implement compliant policies, controls and procedures. From 2017 to 2023 the firm did not have in place an independent audit function.

A review of specific client files during the inspection found that five files did not contain a client and matter risk assessment, while two did not contain adequate source-of-funds checks.

The firm admitted failing to comply with all the SRA’s regulatory arrangements and not keeping up to date with regulations. It was accepted the firm did not act in a way that upholds public trust and confidence in the profession.

The SRA took into account mitigation put forward by the firm. It had implemented a compliant risk assessment and controls within two months of getting feedback and now meets the 2017 regulations. The firm cooperated fully with the SRA’s supervision and investigation teams.

‘The firm recognises that it failed in its basic duties regarding statutory money laundering regulations and regulatory compliance, as identified during our inspection and subsequent investigation,’ said the SRA.

‘The firm has cooperated fully with us, admitted the breaches, shown remorse and remedied the breaches, and there is a low risk of repetition.’

The level of the fine was reduced by 40% to £46,447 based on the remedies made and the firm’s appetite to bring the matter to an end with full and frank admissions. No financial gain or any other benefits were made from the misconduct and no harm was done to clients or third parties. Band Hatton Button also agreed to pay £1,350 costs.