New research shows that the Solicitors Regulation Authority (SRA) has increased the frequency and severity of sanctions for money laundering breaches over the past 12 months.
In the first quarter of 2024, there were ten decisions on AML breaches, and since October 2023, 20 law firms have been fined for failing to comply with money laundering regulations. These decisions reflect the SRA’s use of its new fining powers, resulting in almost £170,000 in fines in the first quarter alone. The average AML fine for small or medium-sized law firms ranges between £10,000 and £25,000.
The breaches mainly involved inadequate due diligence on clients and third parties, insufficient assessment of matter risks, and failure to conduct due diligence on funds from other jurisdictions. Additionally, firms did not perform enhanced due diligence or complete necessary checks before accepting funds, and their AML policies, controls, and procedures were often lacking.
The SRA’s approach to financial penalties was further reformed last year. Now, fines are usually determined as a percentage of annual domestic turnover, up to a maximum of 5%. This aims to deter repetition by the same or other firms and to maintain public confidence in the profession.
Tim Barnett, CEO of Credas Technologies, commented: “The SRA has made no secret of its mission, partly brought on by pressure from the government, to crack down on firms who do not have adequate systems in place to prevent money laundering.
“Failure to manage and demonstrate robust Anti-Money Laundering compliance can potentially result in severe penalties, including fines, reputational damage and even imprisonment for senior management, company executives or directors.
“Our technology enables firms to perform Anti-Money Laundering checks in real-time and confirms the ID document matches the individual. The Credas ID document and identity verification solution has been developed using next-generation facial recognition technology.
“By working with a wide range of leading commercial data suppliers, we offer comprehensive checks on individuals and can verify against over 2,500 different types of identity documents from around the world.”
