The Solicitors Regulation Authority (SRA) has intensified its enforcement of anti-money laundering (AML) compliance, issuing fines exceeding £66,000 to law firms and individuals since the beginning of February. These penalties highlight the severe consequences awaiting those who fail to adhere to legal and ethical obligations regarding financial crime prevention. An alarming wave of AML shortcomings shows the work that firms still need to do to meet their compliance requirements.
The latest regulatory action has seen several firms facing financial penalties for significant failures, including not having a documented firm-wide risk assessment (FWRA) and failing to conduct proper client and matter risk assessments. The following firms have been hit with substantial fines:
– T.A. Khoo Solicitors – £7,282
– The Commercial Law Practice Limited – £11,579
– Steinbergs – £3,778
– Duffield Harrison LLP – £25,000
– Burch Phillips & Co – £3,740
These cases underscore the importance of compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017). Law firms are legally obligated to implement rigorous risk assessments, conduct due diligence, and maintain ongoing monitoring to prevent their services from being exploited for illicit financial activities.
The Cost of Negligence: A Personal Fine of Over £15,000
The SRA has also taken action against individuals, emphasising that personal accountability is as critical as firm-wide compliance. Timothy Gray, of Newcastle-based Mincoffs LLP, has been fined £15,075 for multiple breaches of AML regulations. An SRA forensic investigation found that Gray failed to conduct client and matter risk assessments in all selected files. Additionally, he neglected to perform enhanced due diligence (EDD) in two cases, further exacerbating his regulatory failures.
This individual fine demonstrates that the SRA is not just targeting firms but also holding senior practitioners personally responsible for non-compliance. This should serve as a warning to all legal professionals that they cannot simply rely on their firm’s compliance structures—they must actively ensure they follow proper AML procedures in their practices.
Regulatory Crackdown: A Wake-Up Call for Law Firms
The message from the SRA is loud and clear: failure to comply with AML regulations will not be tolerated. The fines issued in just a few weeks are an urgent wake-up call to all law firms and solicitors. Ignorance is no excuse—firms must have robust risk assessment frameworks in place, conduct thorough due diligence, and regularly train staff on compliance obligations.
The legal sector is particularly vulnerable to money laundering risks, making it imperative for firms to proactively implement and enforce effective risk management strategies. With regulators adopting an increasingly stringent approach, any firm or individual failing to meet their obligations can expect severe financial penalties and damage to reputation.
What Firms Must Do to Avoid Penalties
To prevent costly fines and potential professional misconduct charges, law firms must take immediate action to bolster their AML compliance frameworks. Key steps include:
– Conducting a Firm-Wide Risk Assessment (FWRA): Ensuring a documented and up-to-date risk assessment that identifies potential vulnerabilities.
– Implementing Client and Matter Risk Assessments: Assessing each case individually for money laundering risks.
– Carrying Out Enhanced Due Diligence (EDD) When Necessary: When dealing with high-risk clients, transactions, or jurisdictions
– Providing Ongoing Staff Training: Ensuring all employees understand their obligations under MLRs 2017.
– Maintaining Proper Records and Documentation: To provide clear evidence of compliance in case of an investigation.
The Consequences of AML Shortcomings and Non-Compliance
Fines are just the beginning. Firms that fail to meet AML regulations risk serious reputational damage, substantial fines, potential disqualification of key individuals, and even criminal investigations. The SRA has made it clear that it will not hesitate to take further action against firms that continue to neglect their obligations.
Legal professionals must take these warnings seriously and ensure that compliance is a top priority. With more stringent enforcement measures on the horizon, law firms cannot afford to be complacent. Those who fail to act now may find themselves facing crippling fines, professional disgrace, or even the loss of their practising licenses.
The legal profession must recognise that compliance is not optional—it is essential. In a landscape where financial crime threats are constantly evolving, firms that do not adapt risk being left exposed to regulatory action and significant financial penalties. The recent fines issued by the SRA should serve as a clear warning: the cost of non-compliance is far greater than the cost of implementing proper AML procedures.
