Regulator cranks up AML clampdown with six fines in three days

The Solicitors Regulation Authority has embarked on an end-of-year fining spree with six sanctions announced in the space of three days.

The regulator continued its clampdown on firms failing to meet requirements on anti-money laundering with the flurry of activity and some of the highest fines ever issued.

The latest surge moves the total levied against firms in relation to AML breaches to more than £600,000 in this calendar year. Almost 50 firms have been hit with AML-related financial penalties in the past 12 months, not including those cases that have gone to the Solicitors Disciplinary Tribunal.

Midlands firm Jordans Solicitors was hit with the biggest penalty of £24,954 for misconduct both before and after money laundering regulations were updated in 2017. The firm failed to have in place a documented risk assessment before January 2023 and failed to have the required policies, controls and procedures for more than 10 years. 

The SRA said: ’It was incumbent on the firm to meet the requirements set out in the MLRs 2007 and MLRs 2017. The firm failed to do so. The public would expect a firm of solicitors to comply with its legal and regulatory obligations, to protect against these risks as a bare minimum.’

Jordans acted to rectify the non-compliance and cooperated with the SRA. Its fine was set at between 3.6% and 5% of turnover and reduced to reflect the mitigation.

The second biggest sanction of this week’s collection was issued against central London firm Freedman + Hilmi LLP, which agreed to pay £24,540 and a further £600 costs.

The firm was found to have failed to maintain records of its risk assessments of clients and their matters in six files that were reviewed by the SRA’s AML proactive supervision team.

‘The conduct showed a failure to comply with its statutory and regulatory obligations to record written risk assessments,’ said the SRA. ‘This could have been avoided had the firm established adequate AML documentation and controls.’

Regulators judged the firm should pay 0.8% of its annual turnover and that the penalty should be reduced by 25% to take account of mitigation. The misconduct was deemed less serious because the conduct was not intentional and arose owing to an oversight in the full understanding of the firm’s obligations.

There was no evidence of harm to consumers or third parties and the firm had cooperated fully, admitted the breaches, shown remorse and remedied the issues.

Harrow-based Stenfield Limited agreed to pay £22,345 after failing to have in place a risk assessment from 2017 to 2023 and failing to establish and maintain AML policies until earlier this year. This was despite the firm providing residential and commercial conveyancing services in the scope of money laundering regulations.

For six years the firm was also initially found to have failed to ensure all staff received AML training or to have kept any training records. The firm has since provided details of a comprehensive training plan.

There was no evidence of any harm taking place and no financial gain from the misconduct. The fine was set at between 1.6% and 3.2% of turnover based on multiple failings ‘which formed a pattern of misconduct’.

Hertfordshire firm Paul Berg & Taylor was ordered to pay £21,588 for failing to have the relevant documents in place for six years. The firm cooperated fully with the investigation and took quick remedial action to now be fully compliant with the rules. The fine was set at 2.4% of turnover.

Sussex practice Amanda Shaw Solicitors was fined £12,768 after its firm-wide risk assessment was not considered to be compliant for almost seven years. It also failed to maintain records of its risks assessments so was unable to show what AML measures had been taken. The breaches were remedied with no evidence of any consumer harm or financial benefit.

Emerys Jones & Co, a sole practitioner from Welshpool in mid-Wales, was fined £6,592 (2.4% of turnover) after failing to have the required risk assessment and policies. The firm was compliant within two months of SRA feedback.

The SRA issued a warning notice in October 2023 about the importance of creating and maintaining client and matter risk assessments, and since then has carried out an unprecedented pursuit of sanctions against firms of various sizes. Gazette analysis of this year’s regulator decisions shows that 10 firms have incurred fines of more than £20,000 for AML non-compliance. The busiest time of the year was March when nine sanctions were announced.

This was the first full year in which the SRA’s new approach to financial penalties has been used, determining sanctions based on the firm or individual’s turnover and adjusting that figure to take account of mitigation. All fines are paid to the Treasury rather than the SRA.