In a recent development, Bracknell-based law firm Fairbrother & Darlow has been hut with a fine of £16,000 by the Solicitors Regulation Authority (SRA) due to its inadequate anti-money laundering (AML) controls spanning nearly six years.  

This penalty comes as part of a broader trend, with other firms and solicitors collectively fined substantial amounts for AML breaches in recent months. 

Fairbrother & Darlow Law Fined After Regulatory Review 

The SRA initiated a desk-based review approximately two years ago to evaluate Fairbrother & Darlow’s compliance with the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017. Shockingly, the review uncovered a lack of firm-wide risk assessment or policies, control and procedures (PCPs), and four in-scope files devoid of client/matter risk assessments. 

Adding to the gravity of the situation, Fairbrother & Darlow had submitted an online declaration in January 2020, asserting its compliance with the 2017 regulations. The SRA revealed that the firm’s compliance officer for legal practice completed this declaration “in the mistaken belief” of the firm’s compliance. It was only in spring 2023 that Fairbrother & Darlow finally achieved AML compliance, almost six years after the regulations were enacted. 

Pattern of Non-Compliance 

The SRA, in its findings, highlighted that the breach persisted longer than deemed reasonable, indicating “a pattern of non-compliance” that was also reckless. The law firm failed to consider the SRA’s guidance and warning notices, which clearly outlined the necessary AML requirements and the associated risks and consequences. 

The SRA has demonstrated their determined stance to punish regulation breakers. They have acted decisively in many cases and handed out sanctions for compliance failures where necessary. Westgate Solicitors and Miles Hutchinson & Lithgow were hit with compliance failure fines but while the SRA are handed out fines where appropriate, they are also determined to educate and offer guidance. The regulators recently wrote to over 1,000 law firms to offer advice on compliance and the recommended measures they should look to implement to tackle the ongoing, daily challenges compliance brings.   

Serious Consequences 

The SRA emphasised that the misconduct was serious, posing the potential for significant harm to the public interest and eroding public confidence in the legal profession. The regulatory body classified the failures within a specific band, resulting in a financial penalty ranging from 1.6% to 3.2% of the firm’s annual domestic turnover. Fairbrother & Darlow’s misconduct fell “towards the mid-range” of this bracket. 

Mitigating Factors 

To balance the scales, the SRA acknowledged certain mitigating factors. While the AML failings did not cause significant harm, Fairbrother & Darlow took responsibility by making admissions, cooperating fully with the investigation, and promptly remedying the breaches. Consequently, the fine imposed on the law firm amounted to £16,052.80, along with additional costs totalling £1,350. 

This case serves as a stark reminder of the critical importance of robust AML controls in the legal sector. Firms must heed regulatory guidance, promptly address shortcomings, and ensure ongoing compliance to safeguard both the public interest and the reputation of the legal profession.