Money laundering: solicitor didn’t spot risk indicators
A solicitor who transferred nearly £1.3m of client funds to an offshore bank account in Belize on their instruction has been suspended for a year for breaches of the money laundering regulations and accounts rules.
The Solicitors Disciplinary Tribunal (SDT) said that by doing so, Susan Barrington-Binns “may have, however unwittingly, effectively facilitated the movement of monies during the course of a suspected pension fraud”.
The tribunal said trust in the profession was undermined “whenever a solicitor is involved in a suspicious transaction which involves the use of their client account as a bank”.
The tribunal took into account that Ms Barrington-Binns – who was admitted in 1999 – eventually admitted all the allegations made by the Solicitors Regulation Authority (SRA) against her and its ruling took the form of a judgment on an ‘agreed outcome’ with the regulator.
An earlier attempt to have an outcome agreed by the SDT was rejected because of the lack of any practising restrictions on the solicitor once she returned to practice.
The allegations relating to breaches of the money laundering regulations centred on the receipt of around £1.3m on behalf of a client, referred to as DG, from the Cornerstone Friendly Society (CFS), which entered liquidation in June 2015 “following a police investigation into fraud and money laundering allegations regarding pension investments”.
The SDT said almost £1.27m was then transferred from the client account of Barringtons Legal to an offshore bank account in Belize “without proper due diligence as to the source of the funds”.
Ruling in SRA v Barrington-Binns, the tribunal said the sole practitioner received the money from CFS in October 2013, and recorded the following month that the client was “reputable” and there were “no money laundering issues”.
However, acknowledging receipt of the money in February 2014, the bank in Belize asked for supporting documentation on the source of the funds. Ms Barrington-Binns replied that DG had satisfied all the law firm’s due diligence for money laundering purposes.
The SDT said the solicitor should have been alert to “suspicious features” of the transaction, including that the money came from a friendly society, the CFS account statement was not a bank statement and that the money was being sent to an offshore bank account in Belize.
Ms Barrington-Binns not only failed to obtain bank statements relating to the source of funds, she “failed to obtain from DG any documents evidencing the provenance of the £1.3m” and there was no evidence she saw any documents establishing a link between CFS and DG.
The tribunal accepted that she had “genuine links” to Belize, having lived and worked there and being an attorney at law in the nearby Turks and Caicos Islands, but she was still required to have regard to the money laundering regulations.
She was found to have allowed her client account to be used as a banking facility by DG, failing to consider whether there were underlying legal transactions for the transfers of £1.27m to Belize and of £235,000 back to CFS.
The sole practitioner was “failed to be alert” to the transcation’s suspicious features, breaching SRA principles 3 and 6, and failed to have sufficient regard to the Money Laundering Regulations 2007 and the Law Society’s Warning Card.
On the accounts rule breaches, the SDT found that there had been a “substantial failure to comply” by Ms Barrington-Binns for a period of over two years.
“The accounts were not properly written up to show dealings with client and office money. That resulted in the respondent being unable to prepare proper reconciliations over that period.”
However, the tribunal said that although the solicitor failed to operate a proper client account, there “did not appear to have been any loss of client money”.
In mitigation, Ms Barrington-Binns said she had previously undertaken work for DG, she trusted him and he told her that CFS was a related company and that the money received was from the sales of property and investments.
The tribunal concluded that a striking-off order was not merited in the absence of dishonesty or lack of integrity. A suspension of 12 months would ensure that the solicitor was “meticulous in her compliance with the rules” in the future.
At the end of her suspension, the SDT ordered that Ms Barrington-Binns should be subject to conditions preventing her from being a sole practitioner, acting as COLP or COFA, or being the sole signatory on any client account.
She was ordered to pay costs of £6,000.
Ms Barrington-Binns contacted Legal Futures in February 2019 with an update on her case. She confirmed that her suspension ended on 7 March 2018 and she is currently a practicing solicitor – subject to conditions – and company director.
She said that none of her former clients have been charged with any criminal charges arising from the police investigation into a suspected pension fraud and the Financial Services Compensation Scheme has paid almost £1m to the customers of Cornerstone Friendly Society to cover their losses.
Ms Barrington-Binns said she was never charged with any breaches of any criminal money laundering or other laws.
Update as of Feb 19. Please note that no former clients have been charged with any criminal offences. CFS clients have been fully compensated by the FSC. I have been cleared from the police investigation and have never been charged with any criminal offence. This was an SRA disciplinary matter and not a criminal one. My suspension ended in March 2018 and I am a practising solicitor again. I am exercising my right of reply to this article. Susan Barrington-Binns 14/02/19