AML: Breaches were not deliberate but lasted for eight years
A law firm that failed to conduct proper anti-money laundering checks while acting for a politically exposed person (PEP) has been fined £25,000.
The Solicitors Regulation Authority (SRA) reduced the amount to that figure because PCB Lawyers in central London is a traditional firm and that is the maximum it can fine such a practice.
Had it sought a larger fine, the SRA would have had to refer the firm to the Solicitors Disciplinary Tribunal, as the case predated the unlimited fining powers for matters relating to economic crime it now has thanks to the Economic Crime and Corporate Transparency Act 2023.
According to a regulatory settlement agreement published yesterday, PCB Lawyers – not to be confused with specialist City fraud firm PCB Byrne – acted for the overseas PEP and their associated companies 36 times over eight years to November 2020.
The matters consisted of residential property purchase transactions, refinancing and reassignment work.
The Money Laundering Regulations 2007 and successor regulations in 2017 require enhanced checks and ongoing monitoring when acting for a PEP.
But an SRA investigation found that PCB had not taken adequate measures to establish the PEP’s source of wealth and source of funds, and not conducted enhanced ongoing monitoring of its relationship with that PEP.
The firm admitted breaching the regulations and the SRA code of conduct.
In deciding the amount of the fine, the agreement said that, “while not deliberate, the conduct formed part of a pattern of misconduct because it took place across multiple matters for this client, spanning nearly eight years”.
PCB identified its client as a PEP at the outset and took action to mitigate the risk by applying enhanced customer due diligence measures, obtaining senior management approval to act and seeking advice from external compliance consultants.
“However, in practice, the required actions as specified in the money laundering regulations were not adequately executed.”
Applying the SRA’s fining guidance led to a basic penalty is £39,455, which was reduced by 35% – an unusually large figure compared to discounts in many other cases involving anti-money laundering rule breaches – due to the mitigation.
This was PCB making early admissions, taking “appropriate remedial action” and fully co-operating with the SRA.
This left a figure of £25,646 and the SRA decision-maker exercised their discretion to reduce this to £25,000 on the basis that it would “wholly disproportionate” to refer the case to the tribunal.
“Such proceedings would undoubtedly attract increased legal costs and excessive and unnecessary delays and resource impact. A financial penalty of £25,000 would still have the effect of setting a credible deterrent and upholding public confidence in the regulatory and disciplinary process.”
PCB was also ordered to pay costs of £1,350.
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