AML: Solicitor did not consider potential conflict
The Solicitors Regulation Authority (SRA) blitz on breaches of anti-money laundering (AML) rules has continued, with more than £76,000 in fines handed out to a solicitor and four law firms.
David Partington, a partner at Manchester firm Ogden Lyles & Fox, was fined £11,013 for allowing the firm’s client account to be used for payments and transfers on his and his family’s conveyancing matters which were unrelated to an underlying legal transaction. This occurred on at least six files between 2013 and 2021.
Further, on two occasions, a member of Mr Partington’s family loaned money which was already being held by the firm on another matter to help other clients purchase properties, at an annual interest rate of up to 12%.
The loans were secured by charges registered in the name of the family member.
“There were no documents located on the matter file to demonstrate that Mr Partington had considered potential own interest conflict in allowing his family member to loan money to clients,” the SRA said.
“There was no evidence that he advised the clients to obtain independent legal advice before they accepted the loans.”
Between December 2018 and February 2019, Mr Partington acted for both sides on the sale of a property from a mother to her son at an undervalue, allegedly without her knowledge or consent.
He failed to undertake adequate client due diligence even though the transaction had unusual features and contained ‘red flag’ indicators referenced in the SRA money laundering warning notice.
He did not check and verify identity documents received from a third party, and did not take instructions directly from the seller, or from any person properly authorised to give instructions on her behalf.
The SRA noted that Mr Partington was the firm’s money laundering reporting officer and compliance officer for finance and administration, and that his conduct spanned several years across multiple transactions.
A financial penalty was necessary “to negate any financial benefit which Mr Partington and/or his family member obtained from his misconduct, and which is likely to damage the reputation of the profession”.
The SRA said that, whilst there was no evidence that his actions were intentional or as a result of recklessness or gross incompetence, or that it continued after he became aware that it was improper, there was “a clear pattern of behaviour”.
North London firm Obaseki & Co has been fined £9,000 for multiple AML rule breaches, representing 2.4% of its annual turnover.
On one conveyancing matter in 2021, the firm did not conduct proper client due diligence and accepted over £500,000 into its client account from unconnected third parties based outside of the jurisdiction without any explanation or evidence as to source of funds.
Also in 2021, the firm transferred £4,327 from client to office account on six different matters. “Although the firm said it had sent invoices to the clients concerned, it was found that there was no evidence that the invoices had been properly delivered.
“At the date the transfers were made, the firm had held this client money for a period in excess of five years, with no adequate explanation.”
In mitigation, the SRA said the client account shortage has been partially replaced and the firm had shown “some limited insight”, resolving to deal with residual balances quicker and amending its internal AML guidance.
The SRA has continued to fine firms that have been in long-term breach of their obligations under the 2017 money laundering regulations.
Fairhurst Menuhin & Co in Essex was fined £23,930, 2% of its turnover and close to the maximum the SRA can hand out, for not having proper policies, controls and procedures in place between 2017 and 2022.
In addition, the firm failed to carry out adequate client/matter risk assessments on six files, while it received funds on account on four matters before completing customer due diligence.
Its mitigation was co-operation with the SRA and having “some arrangements in place for managing the risk of money laundering prior to August 2022, including staff training and email reminders regarding ID/AML checks”.
The firm had also taken steps to remedy the harm and there was no evidence that actual harm had materialised.
Austen Jones Solicitors in South-East London was fined £15,202, 2.4% of its turnover, for failing to have a firm-wide risk assessment in place between 2017 and June 2020, and thereafter having an inadequate one.
For five years it also did not have the required policies, controls and procedures or provide staff with AML training. Mitigation was its co-operation, remedying the breaches and no evidence that actual harm occurred.
Finally, Stevenage firm David Barney & Co was fined £17,223 for not having place “relevant documentation to prevent activities relating to money laundering and terrorist financing” as required by the regulations.
Leave a Comment