UK Law Partner suspended over multiple money laundering failures

AML ‘red flag’ indicators, together with the content of the SRA’s warning notice on Money Laundering and Terrorist financing issued in 2014 should have led Ms Levinzon to conduct adequate monitoring.

BACKGROUND

1. A partner [Ms Levinzon] in a law firm [Alexander Dobrovinsky & Partners] which acted mainly for Russian and Ukrainian clients has been suspended for nine months after admitting multiple breaches of the anti-money laundering (AML) rules and allowing client account to be used as a banking facility.
2. Ms Levinzon, admitted as a solicitor in 2007, was one of the three original partners in Alexander Dobrovinsky & Partners, established in 2013. She was the firm’s COLP and COFA and, from April 2018, its AML compliance officer.
   • THE CASE AND JUDGEMENT - https://www.solicitorstribunal.org.uk/sites/default/files-sdt/12071.2020.Levinzon.pdf
3. Alexander Dobrovinsky & Partners was the subject of a previous investigation in 2015, triggered by the firm’s failure to keep a client account from its commencement in February 2013 until May 2014. This resulted in over £2.5m of client funds, from 18 client matters, being put in its office account and remaining there for a further year after the client account was created. Ms Levinzon was rebuked, fined and ordered to pay costs.

THE SRA

1. The SRA launched a forensic investigation in January the following year [2018], reviewing eight property purchases handled by Ms Levinzon,
   • Two sales and
   • One transfer of company shares.
2. The clients for all these matters, bar one, were “of Russian or Ukrainian heritage”.
3. The regulator said that
   • Not only was the “client demographic” for her files predominantly Russia and the Ukraine,
   • But the funds used to buy properties came from companies based in Dubai, the British Virgin Islands, St Kitts and Nevis, and Cyprus.
4. These ‘red flag’ indicators, together with the content of the SRA’s warning notice on Money Laundering and Terrorist financing issued in 2014 should have led Ms Levinzon to conduct adequate monitoring.

THE FACTS

1. The Solicitors Disciplinary Tribunal (SDT) heard that Natalia Levinzon
   • DID NOT IDENTIFY a client as a politically exposed person for money laundering purposes, even though he had recently been a member of his country’s parliament.
   • Misconduct was discovered by the Solicitors Regulation Authority (SRA) during a visit to the Mayfair offices of Alexander Dobrovinsky & Partners in August 2017 as part of a thematic AML review by the regulator.
2. In an agreement with Ms Levinzon, approved by the SDT, the SRA said
   • The AML regulations did not require “a superficial check or even an averagely comprehensive check”; they required “scrutiny – which implies a critical, probing examination”.
   • Proper scrutiny and monitoring was “completely lacking” in the files it reviewed and not only was there a failure to keep full documents and data for due diligence, but Ms Levinzon failed to make sufficient enquiries into the source of funds.
3. A “recurring feature” of Ms Levizon’s responses to the SRA was that
   • She had relied on what clients told her and did not seek documentary evidence to back them up, or saw the evidence and did not retain copies on file.
   • She did not have a written AML policy or risk assessment in place, believing she did not need one as she was the only fee-earner, and had not undergone AML training.

THE CLIENTS - Ms Levinzon admitted

1. IT/PT
   2014. that one client, IT, who instructed her in spring 2015, had been a MEMBER OF PARLIAMENT [PEP] in his country until November 2014.
   2015. There was a family connection between IT and PT, but neither was identified as a POLITICALLY EXPOSED PERSON.
   2016. She failed to apply enhanced customer due diligence to IT or PT, conduct adequate monitoring of other clients or maintain proper records of them.
2. While acting for client M, she admitted
   1. Receiving £135,000 in share purchase money into client account and
   2. Paying it out in a way that amounted to using client account as a banking facility.
3. When no longer instructed by client K,
   1. She allowed £4,400 to remain in client account from 2015 until 2019, without an underlying legal transaction, and
   2. A larger amount of £200,500 to remain in client account from September 2017 to July 2018 without a proper reason.

ENFORCEMENT

The solicitor accepted that these previous offences were “aggravating factors”.

1. 2014. Alexander Dobrovinsky & Partners was the subject of a previous investigation in 2015, triggered by the firm’s failure to keep a client account from its commencement in February 2013 until May 2014. This resulted in over £2.5m of client funds, from 18 client matters, being put in its office account and remaining there for a further year after the client account was created. Ms Levinzon was rebuked, fined and ordered to pay costs.
2. In mitigation, she said her defaults were not deliberate –
   1. She had met each client at least once,
   2. Viewed their identity documentation and
   3. Gained background information on them.
3. There was, she added, no allegation of dishonesty or a lack of integrity, and in the period between the SRA’s investigation starting and the firm closing, she had taken several steps to improve its operation and move the practice away from conveyancing work.
4. The SDT ordered that she should be suspended for nine months and pay £10,000 in costs.
5. At the end of her suspension, she will be subject to conditions for two years,
   • Preventing her from being manager or owner of a law firm, a COLP or COFA,
   • Receiving client money or acting as a signatory to any client or office account.
6. Ms Levinzon has also undertaken to go on two training courses on each of the
   • AML rules,
   • Solicitors accounts and
   • Professional ethics during her suspension.

SOURCE -

https://www.legalfutures.co.uk/latest-news/partner-suspended-over-multiple-money-laundering-failures

https://www.sra.org.uk/consumers/solicitor-check/355242/