In a decisive move to enforce stringent anti-money laundering (AML) regulations, the Solicitors Regulation Authority (SRA) has imposed fines exceeding £66,000 on several law firms and an individual practitioner since the beginning of February. These penalties underscore the SRA’s commitment to upholding professional and ethical standards within the legal sector.
Law Firms Penalized for AML Failures
The following firms have been fined for multiple breaches, including the absence of documented firm-wide risk assessments (FWRA) and client and matter risk evaluations:
- T.A. Khoo Solicitors: Fined £7,282.
- The Commercial Law Practice Limited: Fined £11,579.
- Steinbergs: Fined £3,778.
- Duffield Harrison LLP: Fined £25,000.
- Burch Phillips & Co: Fined £3,740.
Individual Practitioner Sanctioned
In a separate case, Timothy Gray of Newcastle-based Mincoffs LLP was fined £15,075 after an investigation revealed multiple individual failings contributing to the firm’s overall non-compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017). Gray failed to conduct client and matter risk assessments in all files reviewed by the SRA’s Forensic Investigation team and did not perform enhanced due diligence (EDD) on two additional cases.
Focus on Smaller Firms
Research by client compliance platform Thirdfort, obtained through a request under the SRA’s Transparency Code, indicates that smaller firms have been the primary focus of the SRA’s enforcement activities. Firms with 20 or fewer fee earners accounted for:
- 55% of proactive inspections
- 75% of desk reviews
- 86% of enforcement actions in 2023/24
Harriet Holmes, Senior Manager of AML Solutions at Thirdfort, commented:
“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.”
Implications for Legal Practices
These enforcement actions highlight the critical importance of robust AML compliance across law firms of all sizes. The SRA’s intensified scrutiny serves as a reminder that adherence to AML regulations is not optional but a fundamental obligation for legal practitioners. Firms are encouraged to:
- Regularly update risk assessments and client records
- Provide comprehensive staff training
- Develop effective monitoring programs
- Conduct independent audits
Active involvement from senior management and the strategic use of technology can significantly enhance compliance processes, mitigating the risk of regulatory breaches and associated penalties.
