Manchester law firm fined for compliance failures

GD Legal Solicitors Ltd, based in Swinton, Manchester, has been fined £21,843 by the Solicitors Regulation Authority (SRA) for failing to comply with critical anti-money laundering (AML) regulations. The fine, issued on July 2, 2024, follows a series of violations related to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017).

Compliance Failures and SRA Investigation

The law firm, operating primarily in conveyancing since 2019, was found to have significant shortcomings in its adherence to AML regulations. These issues were identified during an SRA inspection in early 2023, which led to a more thorough investigation by the SRA's AML team.

The SRA's findings revealed that GD Legal Solicitors had not maintained a documented firm-wide risk assessment (FWRA) regarding money laundering and terrorist financing, as required by Regulation 18 of the MLRs 2017. This lack of compliance persisted from March 2019 until October 2022.

Moreover, the firm failed to implement fully compliant policies, controls, and procedures (PCPs) from March 2019 until December 2023, as stipulated by Regulation 19. Additionally, the firm did not establish a client and matter risk assessment (CMRA) process until June 2023, which is a requirement under Regulation 28.

Regulatory Breaches and Sanctions

The firm’s conduct was deemed to have breached several principles and regulations over an extended period. Before November 25, 2019, the firm breached Principles 6 and 8 of the SRA Principles 2011 and failed to meet the outcomes outlined in the SRA Code of Conduct 2011. Post-November 2019, the firm's actions were in violation of Principle 2 of the SRA Principles 2019 and Paragraphs 2.1(a) and 3.1 of the SRA Code of Conduct for Firms.

SRA's Rationale and Mitigating Factors

The SRA determined that the firm’s conduct was serious, citing the importance of the MLRs 2017 in protecting the public from the dangers of money laundering and terrorist financing. The prolonged nature of the breaches, coupled with the firm’s significant involvement in regulated activities, amplified the severity of the situation.

The financial penalty was calculated within conduct band C, which corresponds to 1.6% to 3.2% of the firm's annual domestic turnover. GD Legal Solicitors' conduct was placed in the mid-range of this band, leading to a penalty equivalent to 2.4% of its turnover.

In mitigation, the SRA considered the firm’s cooperation during the investigation, the remedial actions it undertook, and the absence of any evidence that actual harm had occurred. These factors were reflected in the final decision, along with an additional order for the firm to pay £1,350 in costs.

Conclusion

This case highlights  the importance of compliance with AML regulations within the legal profession. GD Legal Solicitors Ltd’s failure to adhere to these critical safeguards resulted in a substantial financial penalty and highlighted the firm's responsibility to maintain public trust and confidence in its operations.