The Solicitors Regulation Authority (SRA) has imposed fines on two prominent law firms for failing to adhere to anti-money laundering (AML) regulations.
A London-based law firm, DKLM, was penalised for not conducting thorough checks on the source of funds in a UK property deal involving two Ukrainian nationals. In contrast, the Essex-based Hattens Solicitors lacked comprehensive AML risk evaluations both at the firm level and for individual transactions.
In an arrangement with DKLM, the SRA addressed a complaint regarding an erroneous stamp duty calculation for a first-time buyer. The purchased property’s valuation seemed lower than neighboring houses, and the associated legal fees were unusually high.
The SRA noted DKLM’s dependency on the due diligence and source of funds verification provided by a Ukrainian attorney. The £295,000 transaction took place entirely in Ukraine, bypassing DKLM’s client account, making it challenging to ascertain the funds’ legitimacy. DKLM acknowledged their shortcomings in retrospect and committed no monetary misconduct or laundering. After accounting for mitigating factors, the firm was fined £12,000, with additional costs of £1,350.
In another case, Hattens Solicitors, upon a proactive AML review by the SRA, claimed to have implemented a firm-wide risk assessment (FWRA) in May 2020. However, the SRA found this to be implemented only in November 2021 and deemed it insufficient. The assessment failed to encompass all mandatory elements from the 2017 money laundering guidelines. A review of the firm’s records showed inadequate or missing client/matter risk assessments (CMRAs). Hattens recognized their non-compliance with AML regulations and took corrective measures by March 2023. After considering mitigating circumstances, they were fined £12,700 and agreed to cover £600 in costs.
The SRA’s recent AML report emphasized significant non-adherence within the legal industry. The authority also issued an alert about CMRAs, noting a trend of firms neglecting to complete them consistently.
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