MLR - A snapshot of how law firms are doing
Money Laundering continues to be an area of considerable concern. In July 2017, following the introduction of the MLR 2017, the SRA began visiting 50 firms as part of a thematic review.
In March 2018 it issued a public warning notice after its scrutiny of 50 firms led to 6 being earmarked for disciplinary proceedings. Whilst overall most firms were seen to be taking appropriate steps to understand and reduce the risk of money laundering and comply with the new regulations, several areas of concern were highlighted. These included firms failing to keep records of their decisions, and only 11 had put a firm wide risk assessment in place which is a requirement under the MLR 2017.
Examples of breaches highlighted in the SRA's July 2018 Risk Outlook 2018/19 , include:
- A solicitor being imprisoned for nine months and struck off for facilitating money laundering: The solicitor had handled the purchases of 26 properties for a criminal gang whose activities included drug dealing, mortgage frauds and murder and had failed to conduct identity checks or keep proper records and had allowed the client to conduct banking activities through the client account;
- Firm allowed client account to be used as a banking facility: A firm allowed a client to use their client account as a banking facility for years, with millions of pounds passing through without any underlying legal transactions. There was no suggestion that the money involved was the result of money laundering, but the practice of paying personal bills is contrary to the Accounts Rules. The partner handling the transactions was fined £15,000 by the SDT and the firm was also fined £35,000 for failing to take appropriate action to prevent the breach.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.