SRA reported £149m of ‘suspicious activity’ last year

The Solicitors Regulation Authority made 20 suspicious activity reports (SARs) to the National Crime Agency reporting on £149m of potentially criminal funds, the regulator’s anti-money laundering annual report has revealed. The report appears at a time of increased scrutiny of the role of legal regulators in preventing money laundering. 

Introducing the report, chair Anna Bradley says the SRA 'significantly increased' its resources dedicated to preventing and detecting money laundering last year.

'These additional resources have allowed us to step up our supervision in this area to directly engage with more firms through 163 inspections and 109 desk-based reviews,' she said. 'From the inspections and reviews, we brought 140 from partial into full compliance, and we also made 20 suspicious activity reports to the NCA reporting on £149m of potentially criminal funds, and achieved 51 enforcement outcomes.'

The report states that ways in which SRA-regulated firms and solicitors become involved with money laundering, either knowingly or unknowingly include conveyancing, setting up shell companies or trusts and misusing client accounts to 'clean' proceeds of crime.

The report says that most firms work hard to prevent and spot money laundering, but that some get involved unknowingly. 'A very small number may even knowingly cooperate or work with criminals to launder money.'

In 2021/22 the regulator received 252 reports of potential breaches of the regulations, down from 273 the previous year. The most common categories were failure to carry out or complete client due diligence and failure to carry out a money laundering risk assessment. 

In the year the regulator imposed 29 fines, totalling £286,976 and took eight prosecutions to the Solicitors Disciplinary Tribunal. Five of these resulted in a fine and three a suspension. Fines imposed by the SDT averaged £18,500 each, nearly double the average imposed by the SRA which until this year was restricted to £2,000 for conventional firms and individuals. 

On firms' own risk assessments and policies, the report notes that 58% of the policies reviewed needed improving. Among other failings, 26% of policies reviewed failed to mention what steps a fee earner should take to ensure their client is not subject to financial sanctions.

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