Compliance is everything and here is a tale to prove it. A Yorkshire firm has agreed to pay a £2,000 fine after accepting that it failed to meet the Solicitors Regulation Authority’s requirements for combatting money laundering. The regulator said Pinkney Grunwells, based in Scarborough, had been ‘reckless’ by failing to heed warnings about complying with anti-money laundering regulations. The firm was investigated in 2020 and several areas of concern were raised in relation to compliance with AML regulations and the SRA’s own code of conduct.
Rules which came into force in June 2017 required firms doing ‘in-scope’ work to have a compliant practice-wide risk assessment in place and policies, controls and procedures to prevent money laundering. The SRA published its own warning notice to the profession in 2019 highlighting the need to have these measures in place. The firm incorrectly declared to the regulator in January 2020 that its practice-wide risk assessment was compliant. But inspectors subsequently found five key risk areas which needed addressing: clients, jurisdictions, products and services, delivery channels and transactions. There was no system for identifying and scrutinising complex and/or unusual transactions, customer due diligence was not renewed and the firm had not established its position on wealth checks on clients.
The firm carried out screening of relevant employees only when they were appointed, and not again during their employment – again a breach of money laundering regulations. The SRA said the firm failed to have a compliant risk assessment in place until December 2020 – more than three years after this requirement was introduced.
The firm had also not complied with its obligations to undertake an independent audit, and could not provide a record of what training had been provided to staff (as of May 2022 a central record was kept).
A review of client files found one matter where the firm failed to properly monitor and scrutinise the transaction, including necessary source of funds checks. The client details form was not completed in full and the source of funds section was blank.
The SRA recognised that there was no evidence of harm to consumers or third parties and the firm did not benefit financially from the misconduct. It had assisted throughout the investigation, admitted the breaches, shown remorse and remedied the situation. The firm agreed to pay £600 costs.
So be careful and be compliant, always.