In a decision that underscores the legal sector’s stringent stance on anti-money laundering (AML) compliance, two licensed conveyancers have been handed permanent disqualifications following a serious misconduct ruling by the Council for Licensed Conveyancers (CLC) adjudication panel. The case against James Marshall and Jeremy Kotze of the now-defunct firm Stratega is being marked as one of the gravest the panel has ever adjudicated.

The former directors of Stratega, an alternative business structure with operations in Buckhurst Hill, Essex, and Cheam, Surrey, were accused of a multitude of breaches including deceptive practices with their regulator, excessive client charges, engagement in stamp duty land tax (SDLT) avoidance schemes, and deliberately obstructing a client’s complaint process by denying access to her file.

Marshall, who served as the head of legal practice and more recently as the money laundering reporting officer (MLRO), was found to have taken over the latter role from Kotze in March 2021. Kotze also held the title of head of finance and accounts. The CLC panel identified a disturbingly lax attitude towards AML obligations, with the conveyancers demonstrating inadequate due diligence and checks on clients’ sources of funds and wealth.

One particular incident involved the firm’s handling of £2 million for a Qatari client. Despite having filed a suspicious activity report, the firm moved the funds to another law firm at the client’s request without adequate verification. This, the panel pointed out, was a breach of AML protocols. Although no concrete evidence of money laundering was presented, the lack of due diligence and proper checks was alarming.

Furthermore, the panel critiqued the conveyancers’ naïve approach to identifying politically exposed persons, noting a specific instance where they accepted a client’s self-assessment without further investigation. Their practice-wide risk assessment was also found to be flawed as they considered their firm low risk despite catering to overseas investors and developers, which are factors that typically elevate AML risks.

The case also revealed conflicts of interest, with Marshall handling files where Kotze was involved on the opposing side, a practice that is permissible with informed consent under CLC rules. However, the panel indicated that Marshall’s actions showed a profound misunderstanding of the rules concerning conflicts of interest.

In another alarming revelation, the panel noted that the firm only sought clients’ consent to act on both sides of transactions two years after their completion, an act it denounced as nonsensical.

On the financial side, the panel examined an instance where Stratega’s billing practices were called into question. The firm initially provided estimates of £16,000 but later billed a client over £100,000. The panel condemned the lack of systematic billing and the apparent opportunistic approach to charging.

The severity of the situation was further compounded by the firm’s involvement in facilitating SDLT avoidance through advice from subsidiary companies. Moreover, the deliberate obstruction of a client’s access to her file, coupled with misinformation about the file’s destruction, was particularly egregious.

The adjudication panel concluded that the only suitable course of action to protect the public and uphold the profession’s reputation was the permanent disqualification of both conveyancers. Additionally, each was fined £10,000 and ordered to pay costs of £44,000, bringing this sobering case to a close with a clear message: compliance with AML regulations is non-negotiable, and the consequences of disregard are severe.