SRA overturns Dentons acquittal in AML case

The Solicitors Regulation Authority has succeeded in its appeal against the SDT’s dismissal of allegations against international firm Dentons UK and Middle East over alleged historical breaches of money laundering rules.

Mrs Justice Lang today quashed the Solicitors Disciplinary Tribunal’s decision and remitted the case to a freshly constituted panel.

At a six-day hearing in March 2024, the SDT dismissed charges that Dentons had breached money laundering regulations through its retention of a client from 2013 to 2017. The firm denied all allegations against it. The tribunal found the firm’s ‘inadvertent’ breach ‘fell within the small category of cases where wrongdoing did not amount to professional misconduct’.

In the High Court judgment in Solicitors Regulation Authority Limited v Dentons UK and Middle East LLP,  the judge said she agreed with the primary submission made by the SRA. Noting the authorities of previous appeals in Leigh Day and Beckwith, the judge said 'there is no universal requirement that breaches of the principles and the outcomes can only be established where the requirements of seriousness, culpability and reprehensible conduct are met. Such requirements only arise where they are inherent in the rule in question.’

The judgment said the ‘only evaluation’ required by the SDT ‘was whether or not the firm had complied with regulation 14 of the MLRs 2007’.

It continued: ‘Breach of the standards in Principle 7 and Outcome 7.5 was established once the tribunal made the anterior finding that a legal/regulatory obligation or legislation appliable to the business had not been complied with.’ The SDT therefore ‘erred’ in proceeding to ask itself a further question of whether the firm had breached the principles and the code as alleged.

The judge said: ‘It could not properly be inferred from the language of Principle 7 and Outcome 7.5, in the statutory context, that an additional requirement of seriousness, culpability and reprehensible conduct had to be met.'

Acknowledging the ‘stigma of an adverse disciplinary finding’, the judge said SRA guidance ‘indicates that only serious breaches of the anti-money laundering legislation will progress to disciplinary proceedings which is a safeguard against over-zealous enforcement’.

She said the tribunal’s findings that the firm’s breach was ‘inadvertent and committed in good faith’, that the breach was not systematic and that the SRA had commended the firm for its anti-money laundering systems and controls, which had been deployed for each of the property transactions in issue, were mitigation but ‘did not justify’ the dismissal of the allegation against Dentons ‘when there was a clear breach of the MLRs 2007’.

Allowing the appeal, the judge said costs should follow the event and the SRA was entitled to the ‘reasonable costs’ of the first tribunal hearing.