SDT: Misconduct could have led to strike-off
The first solicitor ever prosecuted for ‘tipping off’ a client about a money laundering investigation has now been suspended from practice for allowing a client to use his firm’s account as a banking facility.
The Solicitors Disciplinary Tribunal (SDT) also fined Osmond Solicitors’ compliance officer.
The Solicitors Regulation Authority’s (SRA) investigation was triggered by William Osmond’s arrest by the Serious Fraud Office (SFO) in 2019.
In 2023, the co-founder and senior partner was sentenced to nine months in jail, suspended for 18 months, for tipping off a client about an SFO investigation; no SDT proceedings followed, however.
The SRA alleged that the London firm received and paid out £388m in multiple currencies on behalf of an overseas businessman, ‘Person A’, and charged him nearly £1.2m in fees.
From 2003 to 2019, the firm acted for Person A, or a company owned or controlled by him, on approximately 132 matters and he accounted for about 10% of its turnover.
The case before the tribunal concerned six exemplified matters relating to Person A’s companies. Between May 2014 and October 2017, the firm received £32m and paid out £28m without any underlying legal transactions to justify the payments.
William Osmond, who qualified in 1979, was the owner and manager of the firm, and Person A’s main point of contact.
He admitted breaching the SRA accounts rules and also contributing to the firm’s anti- money laundering failures by failing to conduct ongoing monitoring of its business relationships or applying enhanced customer due diligence.
In mitigation, Mr Osmond pointed out that none of the transactions had resulted in loss to any client or third party and he had not profited from them.
Once he became aware of the banking facility rules, he added, he stopped making payments and returned all the funds held by the firm to Person A.
The SDT said allowing use of client account in this way, “for no other reason than the convenience of a client”, was a very serious breach of the rules.
The misconduct was aggravated by the number of transactions and length of time it lasted.
It said: “Aside from the firm’s own written anti-money laundering policies, controls and procedures, there was clear guidance from the Law Society and the SRA warning of the need to mitigate the risks of the firm’s services being used for money laundering, which [Mr Osmond] should have been aware of.”
Despite the mitigation, the SDT considered that the misconduct was serious enough to consider striking off Mr Osmond.
However, a regulatory settlement agreement between the SRA and the solicitor proposed a 12-month suspension and, on his return to practice, indefinite restrictions that he cannot be a sole owner of a law firm or a compliance officer, hold client money or be a signatory on any client account.
This was enough to convince the SDT that the public would be “adequately protected” from Mr Osmond in the future.
Paul Christopher Flaherty, who qualified in 2007, held both of the compliance officer roles at Osmond & Osmond from January 2015 and admitted allowing the use of its client account as a banking facility.
He told the tribunal, after he took on the roles and spotted high-value transactions which did not appear to relate to conveyancing matters, Mr Osmond had assured him that the entries were “properly made”.
Mr Flaherty knew about Person A from his time a decade earlier as Mr Osmond’s trainee “and accepts that he took that assurance on trust without making any further inquiries or checking the files himself”.
It was only in September 2017, when the firm’s auditor said it would qualify its accountant’s report that he then had a further discussion with Mr Osmond and insisted that the payments could not continue.
There was no suggestion Mr Flaherty had otherwise breached his obligations – he admitted treating Mr Osmond differently from all others at the firm.
The SDT acknowledged the solicitor’s regret “for his mistaken belief that he could rely on assurances provided to him from his co-partner whom he respected, trusted and had known for over 10 years”. It approved a separate settlement agreement that a fine of £5,001 was appropriate.
The SDT also ordered Mr Osmond to pay costs of £50,000 and Mr Flaherty of £15,000.
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