Navigating AML compliance: SRA imposes sanctions on Hine Downing LLP for regulatory lapses

The Solicitors Regulation Authority (SRA) recently concluded disciplinary proceedings against Hine Downing LLP, a recognised legal entity based in Falmouth. The decision, resulting from breaches in anti-money laundering (AML) regulations, highlights critical shortcomings in the firm's compliance framework.

In October 2021, the SRA's Anti-Money Laundering (AML) Proactive Team conducted a review at Hine Downing LLP to assess its compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017). The review uncovered significant deficiencies, notably the absence of compliant Policies, Controls, and Procedures (PCPs) and inadequate client matter risk assessments (CMRAs) on four files.

Allegations against Hine Downing LLP outlined breaches of MLRs 2017 regulations, which extended over an extended period until around September 2022. These breaches contravened both SRA Principles 2011 and 2019, along with corresponding sections of the SRA Code of Conduct for Firms 2019.

In response to these findings, the SRA imposed a financial penalty of £20,870.68 on Hine Downing LLP, coupled with additional costs. This sanction reflects the seriousness of the firm's misconduct, its persistence, and the potential risks posed to public interest and confidence in the legal profession.

The decision to levy sanctions was guided by the SRA Enforcement Strategy, considering factors such as the duration of the breaches, the potential harm to public interest, and the firm's proportion of 'in scope' work under MLRs 2017. Despite the severity of the penalties, mitigating factors such as the absence of significant harm, the firm's cooperation, admissions, and remedial actions were considered in determining the final fine.

This case serves as a poignant reminder of the paramount importance of robust AML compliance within legal practices. Firms must uphold stringent adherence to regulatory standards to safeguard public trust and confidence in the legal profession. Moreover, proactive measures, such as effective governance structures and continuous regulatory awareness, are essential to mitigate the risk of regulatory breaches and uphold the integrity of legal services.