Law firms fined after failing to comply with anti-money laundering regulations

Solicitors have been handed £160,000 in fines after failing to comply with anti-money laundering (AML) regulations, a regulator has revealed.

The Solicitors Regulation Authority (SRA) said a minority of law firms are not doing enough to prevent criminal activity.

Under the AML regulations, solicitors who hold client money – around 6,500 law firms in the UK – are required to comply with a strict set of rules and carry out a risk assessment to ensure that legal services are not being used for illicit purposes.

But the latest research suggests that firms are still falling foul of the rules, with the most common breaches including not having a risk assessment in place, poor client due diligence, and not checking the source of funds.

According to the report, the SRA received 273 reports of potential AML breaches in the year to October 2021 – resulting in 85 firm visits, 29 enforcement notices, and fines totalling £160,000.

Commenting on the figures, Anna Bradley, Chair of the SRA Board, said: “I know from our discussions with local law societies that meeting their obligations is something that matters a lot to the profession. The overwhelming majority want to do the right thing, but there is still a small but nonetheless significant proportion of firms which are just not doing enough to prevent money laundering.

“As well as allowing criminals to profit from their actions, they undermine the trust consumers place in the profession, damaging confidence in the rule of law and the administration of justice.

“We take our role as an AML supervisor very seriously, as this review of our work in 2020/21 demonstrates. I would urge all firms and solicitors to take the steps needed to meet their obligations.”

The regulator is required to publish an annual professional supervisor report each year, as required by the Money Laundering Regulations, the Office for Professional Body Anti-money laundering Supervision (OPBAS) and HM Treasury.

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