UK Fines Law Firm For AML Violations

January 10, 2022
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Mishcon de Reya, the UK law firm known for representing the rich, famous and powerful, has been fined £232,500 over anti-money laundering (AML) failures.

Mishcon de Reya, the UK law firm known for representing the rich, famous and powerful, has been fined £232,500 over anti-money laundering (AML) failures.

The Solicitors Regulation Authority (SRA) found that the high-profile law firm, which represented Princess Diana in her divorce and was involved in the historic Article 50 legal challenge following the Brexit vote, violated the money laundering regulations on several occasions during two works.

“[T]here were serious breaches,” and “the conduct had the potential to cause significant harm by facilitating transactions that gave rise to a risk of facilitating money laundering,” the regulator said in its decision.

The parties settled the case for £232,500, which is the largest fine ever imposed by the SRA.

The first group of violations relate to advice the high-profile law firm gave to two individuals and their corporate vehicles on two proposed acquisitions.

During the exercise, the firm failed to carry out proper customer due diligence (CDD). First, it did not keep a hard copy of the individuals’ files, then it failed to obtain all the necessary documents of one of the corporate vehicles.

Despite the fact that the proposed acquisitions involved companies in high-risk jurisdictions, Mishcon de Reya did not apply enhanced customer due diligence (EDD) and ongoing monitoring properly.

These failures largely resulted from the fact that the partner who was responsible for these clients and operations had not received mandatory training.

The top law firm acknowledged that the former partner was not adequately trained and admitted the procedures did not mitigate against the risk of non-compliance.

The regulator found further CDD failures on a separate occasion when Mishcon de Reya acted on three property transactions, which were related to one another and, for each transaction, the firm’s client was a separate special purpose vehicle with the same ultimate beneficial owner.

Mishcon de Reya also admitted that, until March 2019, the firm did not have a written firm-wide AML risk assessment.

Mishcon de Reya spokesperson said in an email statement that they are pleased to have come to a settlement with the SRA relating to two separate and historic investigations.

"Mitigating factors such as our cooperation with the SRA throughout the investigations and the corrective action we have taken since to prevent a recurrence have been recognised by the SRA in reaching this outcome," they stressed.

Law firms have gone under the spotlight recently after the Pandora Papers revealed how the so-called gatekeeper professionals, such as lawyers, accountants, and real estate agents, help the rich to channel their money offshore.

The Pandora Papers was a wake-up call for all countries around the globe, revealing that regulations need to be further strengthened.

Lessons learned from the leaked documents are being considered in discussions around the EU’s latest AML package, as well as during the implementation of the historic U.S. AML Act 2020. Meanwhile, Australia is also carrying out a review of the “adequacy and efficacy” of its AML/CFT framework with stakeholders warning legislators that the country is lagging behind in modernising its AML laws.

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