An ex-partner is fined while the city law firm is cleared of breaching money laundering regulations.

In the week, the UK AML “supervisor of supervisors” OPBAS issued a stark warning that none of the 22 professional regulators for lawyers and accountants, including the SRA, are fully effective, and some are even regressing in their effectiveness. There is now another blow for the Solicitors Regulation Authority.  The Solicitors Disciplinary Tribunal today ruled that allegations brought by the Solicitors Regulation Authority against

• CANDEY LIMITED had NOT BEEN PROVEN following a substantive hearing.

However Former partner Richard Morris was fined £6,000.00 fine for his breach and ordered to pay £10,000 costs. Richard Morris:-

• Admitted his failures in effectively allowing the firm’s client account to be used as a clearing bank,
• Admitted to failing to carry out adequate checks on a client but was cleared of authorising any payments or using the client account as a banking facility

CANDEY LIMITED claims that its AML systems were comprehensive, ALTHOUGH they failed to prevent Morris's failures.

• The firm’s Money Laundering Reporting Officer, Ashkhan Candey, described their AML systems as “CANDEY GOLD”.

WHAT WAS MISSED

1. The firm received a substantial amount, £24 million, from Qatar, believed to be the proceeds of a settlement agreement relating to a dispute outside the UK.
2. However, by the time they followed up to check the legitimacy of the litigation, £7.7 million had already been transferred out of the firm’s account.

POLICIES AND PROCEDURES

1. Candey said Morris failed to follow the firm’s policies and didn’t flag the convicted fraudster's involvement, including the fact that he was giving instructions about the transaction when he was not the client.
2. Before this, the firm had a history of 12 other matters with the client, raising serious questions about its due diligence and risk assessment.

This is the third blow in quick succession for the Solicitors Regulation Authority. After failing to make allegations stick against firms in other AML cases, it's becoming increasingly clear that there are fundamental gaps in accountability.

Firms are being let off the hook for their involvement in dodgy transactions, highlighting the urgent need for stricter regulations.

Source: 

1. SRA fails to prove misconduct against City law firm Candey Limited over .... https://www.lawgazette.co.uk/news/sdt-dismisses-allegations-against-city-firm-over-aml-checks/5121002.article.
2. City law firm and former partner charged by SRA over alleged breaches .... https://www.lawgazette.co.uk/news/city-firm-and-former-partner-charged-by-sra-over-events-from-2015/5119698.article.
3. Verify 365 insights: Lessons from SRA's action against Candey on source .... https://www.legalfutures.co.uk/associate-news/verify-365-insights-lessons-from-sras-action-against-candey-on-source-of-funds-checks.
4. https://www.spotlightcorruption.org/falling-at-the-first-hurdle-what-two-recent-cases-against-law-firms-handling-suspect-money-show-about-the-uks-anti-money-laundering-enforcement-regime/
5. https://www.spotlightcorruption.org/aml-supervisory-reform-is-critical/