The Solicitors Regulation Authority (SRA) has flexed its regulatory muscles with a series of fines levied on firms and individuals for failure to comply with money laundering regulations. Fines totalling over £66,000 have been levied since the beginning of February alone. These cases serve as a stark reminder to legal practitioners of the importance of upholding professional and ethical standards say the regulatory body.
T.A. Khoo Solicitors (£7,282), The Commercial Law Practice Limited (£11,579), Steinbergs (£3,778), Duffield Harrison LLP (£25,000) and Burch Phillips & Co (£3,740) have all been fined this week for multiple failures including the failure to have a documented firm-wide risk assessment (FWRA) in place and failure to have client and matter risk assessments.
Separately Timothy Gray of Newcastle-based Mincoffs LLP was fined £15,075 after an investigation identified multiple instances of individual failings contributing to the firm’s overall failure to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulation 2017 (MLRs 2017). Gray failed to conduct client and matter risk assessments in all the files selected by the SRA’s Forensic Investigation team and did not carry out enhanced due diligence (EDD) on a further two.
Research conducted by client compliance platform Thirdfort following a request for information under the SRA’s Transparency Code, found small firms have been the focus of the SRA’s activity; firms with 20 or fewer fee earners account for 55% of proactive inspections, 75% of desk reviews, and 86% of enforcement actions taken by the SRA in 2023/24
Commenting on the figures Harriet Holmes, Senior Manager AML Solutions, at Thirdfort, said:
“Over the past year, small firms are more likely to have come under SRA scrutiny regarding their AML compliance. This may relate to a lack of in-house resources at the law firm when it comes to compliance, where many lawyers at small firms will be juggling fee earning and compliance requirements. It may also relate to the areas in which these firms operate. For example, the SRA has flagged areas such as conveyancing as facing increased risk.
“Money laundering risk affects all law firms, and the 2023-24 SRA report serves as a warning sign for firms of all sizes. To avoid fines, compliance with anti-money laundering regulations must be an ongoing responsibility. This includes regularly updating risk assessments and client records, providing staff training, developing monitoring programs and conducting independent audits. Senior management needs to remain actively involved, and technology can be utilised to enhance compliance processes.”
