AML: Multiple failures
A solicitor who failed in his “basic duties” around anti-money laundering has been fined £2,000 – rather than up to £50,000 his misconduct deserved – because he has agreed to leave the profession.
The Solicitors Regulation Authority (SRA) said Malcolm Christopher Grumbridge had been “reckless” in his disregard for his obligations, but there was “no evidence of harm to consumers or third parties”.
The SRA said that, as an experienced conveyancer, he should have “completed all of the necessary checks required” and put in place a firm-wide risk assessment.
“He recognises that despite his health issues and the stressful environment of running his own practice, he failed in his basic duties regarding Money Laundering Regulations and general regulatory compliance, which caused further breaches in a number of transactions as identified during the SRA’s inspection.”
Mr Grumbridge qualified in 1978. A former partner at City firm Lewis Silkin, he is often described in the media as an “associate” of the family of Robert Maxwell.
In a regulatory settlement agreement, the SRA said Mr Grumbridge’s misconduct was assessed as deserving a fine of between £25,000 and £50,000.
However, “on the basis of the mitigation offered, and the undertaking provided by Mr Grumbridge to remove his name from the roll of solicitors and not seek to reapply”, a fine of £2,000 was appropriate – anything more and the SRA would have had to refer him to a disciplinary tribunal.
“This also reflects and takes into consideration the admissions made by Mr Grumbridge at an early stage, his ill health and his co-operation with the SRA’s investigation.”
The solicitor ran MC Grumbridge in West London, which it closed down in September 2018.
The regulator said its books of account had not been “accurately maintained”, inter-client loans had been made without proper written authority and there were cash withdrawals from client account in favour of Mr Grumbridge.
Payments were received into client account without an underlying legal transaction and a cash gift from a client was transferred to the solicitor’s personal bank account “via the firm’s US dollar client account and then the firm’s sterling client account” without the client being advised to obtain independent legal advice.
No policies, controls and procedures had been put in place to guard against the risk of money laundering, as required by the Money Laundering Regulations 2017 and 2007.
The SRA said that from 2007 to 2017 there was a failure to apply customer due diligence to all clients involved in five transactions and a failure to conduct “ongoing monitoring of a business relationship” by scrutinising transactions and source of funds in compliance with the regulations.
“There was a failure from 26 June 2017 onwards to conduct any or any adequate due diligence and/or enhanced due diligence on all clients, all parties to the transactions and/or on any unrelated third parties making payments into the client account.”
Several files contained no documentary evidence that Mr Grumbridge had considered the risks of conflicts of interest, even when he was “acting for two brothers simultaneously, with one file and one client ledger, and in another, he represented a company of which he was a co-director”.
The SRA said the sole practitioner submitted returns to the HMRC containing “incorrect information”, stating that a company of which Mr Grumbridge was the director was a dormant company, “whereas client ledgers indicated that the company was active during that specific period”.
Mr Grumbridge was ordered to pay costs of £1,350.
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