SRA found failures in customer due diligence, matter risk assessments and implementation of the firm’s own AML procedures
Parnalls Solicitors Limited has been fined £32,106 after the SRA found AML compliance failures that persisted for more than eight years.
The Launceston-based licensed body also agreed to pay £600 towards the regulator’s investigation costs under a regulatory settlement dated 9 June 2026 and published on 11 June 2026.
The SRA opened an investigation following an inspection by its anti-money laundering proactive supervision team, which identified concerns over the firm’s compliance with the Money Laundering Regulations 2017, the SRA Principles and the Code of Conduct for Firms.
In three files, the firm failed to carry out appropriate customer due diligence, including sufficient scrutiny of transactions and, where necessary, the source of funds.
In four files, it failed to conduct client and matter risk assessments. The SRA also found in four files that the firm had failed to follow or implement its own anti-money laundering policies, controls and procedures.
Although the firm’s firm-wide risk assessment, policies and procedures, and risk-assessment template were compliant at the time of the inspection, the regulator found that the required controls were not consistently documented or followed on individual files.
The SRA said the failure to maintain proper documentation at file level demonstrated a “persistent disregard” of the firm’s regulatory obligations and resulted in insufficient scrutiny of the risks presented by clients and matters.
It found that the breaches arose through recklessness and a failure to pay sufficient regard to money laundering regulations, published guidance and SRA warning notices.
The regulator said Parnalls only became compliant as a result of its AML desk-based review and the guidance it provided. The firm did not achieve full compliance with the 2017 regulations until December 2025, when it satisfied the requirements of an SRA compliance plan.
The SRA said the firm had therefore remained in breach for more than eight years from the point at which the Money Laundering Regulations 2017 came into effect.
Around two-thirds of the firm’s work falls within the scope of the money laundering regulations, principally through conveyancing. The regulator said conveyancing was a high-risk area because property transactions can be exploited for money laundering or terrorist financing. The firm’s failures therefore left it susceptible to being used for those purposes. However, the SRA found no evidence of direct loss to clients or actual harm resulting from the misconduct.
Parnalls admitted breaching paragraph 2.1(a) of the SRA Code of Conduct for Firms by failing to maintain effective governance structures, arrangements, systems and controls. It also admitted failing to keep records demonstrating compliance, failing to follow the law and regulation governing its work, and breaching Principle 2 of the SRA Principles, which requires firms to act in a way that upholds public trust and confidence in the solicitors’ profession and legal services.
The SRA said a financial penalty was appropriate because the conduct showed disregard for statutory and regulatory obligations and had the potential to cause harm by leaving the firm without adequate AML documentation and evidence at file level.
It added that the sanction was required to provide a credible deterrent and to demonstrate the risks to the public and the legal sector when firms fail to comply with anti-money laundering legislation.
The regulator assessed the seriousness of the conduct at three and the impact or risk of harm at four. The combined score of seven placed the penalty in Band C, towards the lower end of the applicable range.
Based on the firm’s annual domestic turnover, the SRA calculated a basic penalty of £42,808. This was reduced to £32,106 to reflect mitigating factors, including the firm’s cooperation with the SRA, its early admissions and the steps it had taken to rectify the failures.
The firm reviewed all active matters within the scope of the money laundering regulations to ensure that documented client and matter risk assessments and sufficient source-of-funds checks were in place. It also provided training to fee earners on completing risk assessments and obtaining and scrutinising source-of-funds information.
The SRA said Parnalls had satisfied the requirements of its compliance plan, while a further sample of live files showed that its procedures were being followed and implemented.
The regulator also found that the firm had made no financial gain or obtained any other benefit from the misconduct, meaning no further adjustment to the penalty was necessary.
The settlement was reached by agreement. As Parnalls is a licensed body, the SRA said it was legally required to publish the enforcement decision.