Clement Hughes & Co fined for AML failures
SRA discovers anti-money laundering compliance failures, revealing regulatory negligence and disciplinary action
The Solicitors Regulation Authority (SRA) recently concluded disciplinary proceedings against Clement Hughes & Co, a recognised legal entity. The decision, reached due to breaches in anti-money laundering (AML) regulations, sheds light on significant compliance gaps within the firm's operations.
The disciplinary action, stemming from a review conducted by the SRA's Anti-Money Laundering (AML) Proactive Team in early to mid-2022, highlighted multiple deficiencies in Clement Hughes & Co's AML compliance framework. Specifically, concerns arose regarding the absence of essential documentation mandated by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017).
The firm's failure to maintain a Firm Wide Risk Assessment (FWRA), implement fully compliant Policies, Controls, and Procedures (PCPs), and conduct Client Matter Risk Assessments (CMRAs) led to regulatory scrutiny. Despite regulatory requirements mandating these measures, the firm fell short in fulfilling its obligations until corrective action was initiated post-2022.
Allegations against Clement Hughes & Co outlined a significant breach of regulatory principles and codes of conduct. The firm's inability to adhere to MLRs 2017 regulations constituted violations of SRA Principles 2011 and 2019, along with breaches of the SRA Code of Conduct for Firms.
As a consequence of these lapses, the SRA imposed a financial penalty of £9,993.40 on Clement Hughes & Co, alongside additional costs. The decision to levy sanctions was based on the severity of the firm's misconduct, its persistence over an extended period, and the potential risks posed to the public interest and confidence in the legal profession.
Mitigating factors considered included the absence of realised harm, the firm's cooperation during the investigation, partial admissions of fault, and subsequent remedial actions taken. Despite these factors, the SRA deemed the firm's conduct as serious and reflective of inadequate compliance practices.
This case underscores the critical importance of robust AML compliance within legal practices. Failure to uphold regulatory standards not only invites disciplinary action but also undermines public trust and confidence in the legal profession. Moving forward, it is imperative for legal entities to prioritise stringent adherence to AML regulations to safeguard both their reputation and the integrity of the legal industry.