The SRA fines two more firms for AML failings. One is a prominent property law firm based in Manchester has been hit with a significant fine of nearly £22,000 by the Solicitors Regulation Authority (SRA) due to shortcomings in its anti-money laundering (AML) procedures. This penalty represents one of the larger fines within the SRA’s authority, amounting to 2.4% of the firm’s annual turnover.
GD Legal are not the only firm to be recently fined by the SRA; in the last few days, Symons Gay & Leland LLP, an east London law firm, was fined £12,636 for AML breaches that occurred between June 2017 and July 2023. These breaches were uncovered through a desk-based review by the SRA and were found to include inadequate risk assessments and non-compliant firm-wide policies.
SRA Fines Two More Firms: Failures in Compliance
The SRA’s scrutiny of the firm, GD Legal, stemmed from an inspection carried out in early 2023. This inspection uncovered several areas of concern regarding the firm’s adherence to the Money Laundering Regulations (MLRs) of 2017. The ensuing investigation revealed that GD Legal, which specialises in both residential and commercial property transactions, lacked a documented and compliant firm-wide risk assessment from March 2019 until October 2022.
It wasn’t until June 2023 that the firm introduced a proper client and matter risk assessment process. Furthermore, it took until December 2023 for GD Legal to establish fully compliant policies, controls, and procedures. The SRA highlighted that the risks posed by these breaches were particularly significant given the high proportion of the firm’s work that fell under the scope of the MLRs 2017.
Potential Risks and Mitigation
The SRA expressed concern that the breaches “persisted for longer than was reasonable” and had the potential to undermine public confidence and the public interest. Despite these serious concerns, the regulator acknowledged that there was no evidence of actual harm resulting from the firm’s failings.
In determining the fine, the SRA applied its fining guidance, which led to the calculation of £21,843 – equivalent to 2.4% of the firm’s turnover. In mitigation, the SRA noted GD Legal’s cooperation with the investigation and the remedial actions it had taken to address the deficiencies.
In addition to the fine, GD Legal was ordered to pay £1,350 in costs. Given the firm’s traditional structure, the maximum fine the SRA could impose was £25,000. However, this ceiling is expected to change with the introduction of unlimited fining powers for matters related to economic crime, as per the Economic Crime and Corporate Transparency Act 2023.
The Impact of Fines on Law Firm Processes
With the SRA continuing to clamp down on firms meeting their AML requirements, it is essential law firms have effective and efficient processes in place to ensure they are practising compliantly.
Efficient processes enable your firm to function to its maximum potential, and platforms such as Verify 365 can help ensure you’re not only more efficient but are practising compliantly, meeting the SRA’s strict guidelines at all times. Our platform is the only complete AML, KYC, and client onboarding software designed for the legal sector that enables firms to complete fast biometric identity checks and more.
A Changing Regulatory Landscape
The SRA is currently consulting on amendments to its fining regime in light of these new powers. The consultation document outlines that the new regime will apply to misconduct involving criminal offences under the Money Laundering Regulations, breaches of international sanctions, financial dishonesty, theft, and the improper use of client funds, especially where fraud or inadequate controls are involved.
These new powers, which will be enforceable for offences occurring after the 4th of March 2024, are likely to result in more fines exceeding 5% of a firm’s turnover. However, the SRA anticipates that fewer of these cases will be referred to the Solicitors Disciplinary Tribunal, suggesting a shift towards swifter regulatory action.
