The Solicitors Regulation Authority (SRA) has recently imposed significant fines on multiple law firms for breaches of anti-money laundering (AML) regulations, with the highest fine reaching £24,540. A common failing among these firms was the absence of a firm-wide risk assessment (FWRA), along with inadequate policies, controls, and procedures (PCPs) to prevent money laundering and terrorist financing. Additionally, many firms failed to conduct proper client and matter risk assessments (CMRAs), which are critical for compliance with AML.
Law firms must ensure they have comprehensive AML frameworks in place, including robust risk assessments, clear policies, and regular staff training. Failing to meet these requirements can result in severe financial penalties, reputational damage, and potential disciplinary action. The inconsistencies in SRA fines highlight the importance of proactive compliance rather than reactive mitigation. Firms should not only establish compliance measures but also continuously review and update them to meet evolving regulatory expectations.
To avoid enforcement actions, firms must document all risk assessments, conduct independent audits where required, and cooperate fully with regulators. The cases show that firms admitting misconduct and implementing corrective measures received reduced penalties. However, those that failed to cooperate or lacked basic AML controls faced harsher consequences, such as referral to the Solicitors Disciplinary Tribunal. Ensuring ongoing compliance is not just a regulatory requirement but a crucial safeguard against financial crime and legal liability.