A central London firm has agreed to pay £25,000 – the maximum penalty that the regulator can issue – after admitting failing to do proper checks on a risky foreign client.
Property specialist PCB Lawyers LLP accepted it did not take adequate measures to establish the source of wealth in its transactions with an international client considered a politically exposed person (PEP). The firm also failed to conduct enhanced ongoing monitoring of that client.
In total, PCB acted for the PEP and their associated companies for almost eight years to 2020, across 36 matters consisting of property purchases, refinancing and reassignment work.
The source of wealth and source of funds checks were required by the money laundering regulations. The Solicitors Regulation Authority said the breaches of these rules created the potential to cause ‘significant harm’ by exposing the firm to the risk that its services would be used to carry out money laundering or terrorist financing.
‘The firm’s conduct was serious, and diminished trust in the legal profession,’ added the SRA. ‘Any lesser sanction would not provide a credible deterrent to the firm and others.’
The regulator had assessed the potential penalty as being between 1.6% and 3.2% of the firm’s annual turnover. Based on this, the basic fine was set at £39,455 but this was adjusted down to take account of the firm’s early admissions, appropriate remedial action including new processes and extra training, and full co-operation.
The adjusted fine was £646 above the SRA’s maximum fining power, but the parties agreed between themselves to reduce it to £25,000. The regulator’s own fining guidance gives discretion to reduce fines to come under the maximum in exceptional circumstances: this is designed to avoid proceedings going to the Solicitors Disciplinary Tribunal.
‘Such proceedings would undoubtedly attract increased legal costs and excessive and unnecessary delays and resource impact,’ said the SRA. ‘A financial penalty of £25,000 would still have the effect of setting a credible deterrent and upholding public confidence in the regulatory and disciplinary process.’
The firm also agreed to pay £1,350 costs.
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