LAW Firm fined £31,000 for 'disregarding' AML rules over six years.

The Solicitors Regulation Authority regulator has issued one of its most significant anti-money laundering fines against a firm that failed to comply with the rules for six years.

Inspectors assessed six files handled by Manchester firm Nexus Solicitors and found

• None contained a compliant risk assessment.
• This was despite the firm’s staff handbook referring to a risk assessment and due diligence form and setting out a process for checking clients.

The Solicitors Regulation Authority said that the firm failed to

• Document any risk assessment or provide a clear audit trail of the decision-making process, methods and rationale.

Based on the six randomly selected files, it was evident that staff were not following proper processes from 2017 onwards.

On four matters, Nexus also failed to comply with its obligations around the source of client funds checks. These files had:-

• Involved foreign nationals and showed red flags on an e-verification report, but there was a lack of scrutiny about where clients resided or where their money came from.

It was only in autumn 2023 that the firm confirmed that its policies had been updated, an independent audit conducted, staff trained, and all in-scope files reviewed and updated regarding risk assessment and source of funds checks.

The SRA accepted that the firm took steps to rectify failings and is now compliant with regulations. It has cooperated fully and admitted breaches at the earliest opportunity.

However, a fine of between 1.6% and 3.2% was deemed appropriate because the firm had shown a ‘disregard towards statutory and regulatory obligations’ and had the potential to cause harm.

This was especially so as a quarter of the firm’s work is in the scope of the MLRs, mostly through conveyancing.

• ‘It was incumbent on the firm to meet the requirements set out in the MLRs 2017,’ added the regulator. ‘The firm failed to do so. The public would expect a firm of solicitors to comply with its legal and regulatory obligations, to protect against these risks as a bare minimum.’

After considering mitigating factors, the SRA issued a fine of £31,217. It did so because Nexus Legal is an alternative business structure and is not subject to the £25,000 limit for traditional firms.

SOURCE

https://www.lawgazette.co.uk/news/firm-fined-31000-for-disregarding-aml-rules-over-six-years/5122456.article