SRA fines Pearcelegal £12,958 plus £600 costs after years of AML compliance failures
Pearcelegal Limited has been fined £12,958 by the Solicitors Regulation Authority (SRA) after a regulatory investigation found that the Solihull-based licensed body failed to maintain a compliant firm-wide risk assessment for money laundering over a period of more than six years. The firm has also been ordered to pay £600 towards the regulator’s investigation costs.
The SRA announced the outcome of the case on 23 September following a regulatory settlement agreement with the firm. The investigation was triggered by a desk-based review conducted by the regulator’s Anti-Money Laundering Proactive Supervision team. That review identified serious concerns about Pearcelegal’s compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, the SRA Principles, and the Code of Conduct for Firms.
According to the decision, the firm failed between June 2017 and May 2023 to have any documented firm-wide risk assessment in place. Regulations require such an assessment to identify and evaluate the risks of money laundering and terrorist financing to which the practice is exposed. In May 2023, Pearcelegal produced its first version of the risk assessment but it was deemed incomplete and did not address all of the areas required for compliance. The firm had previously declared in 2020 that it already had a compliant assessment in place, a statement the SRA later determined was inaccurate.
Embed from Getty ImagesFollowing feedback from the regulator, Pearcelegal provided an updated risk assessment in November 2024 that met the requirements of Regulation 18. The SRA accepted that the revised document was compliant, but the earlier failings represented a long-standing breach of statutory obligations.
In reaching the settlement, the firm admitted breaching multiple provisions of the regulatory framework. For the period before November 2019, breaches were recorded under Principles 6 and 8 of the SRA Principles 2011, together with failures to meet Outcomes 7.2 and 7.5 of the 2011 Code of Conduct. For the period from late 2019 until November 2024, breaches included Principle 2 of the SRA Principles 2019 and several provisions of the 2019 Code of Conduct for Firms.
The SRA said Pearcelegal’s conduct showed a disregard for legal and regulatory duties, exposing the firm to risks that could have facilitated money laundering or terrorist financing. Although no specific harm was identified in relation to client files, the absence of proper systems and documentation was considered a serious failure.
In determining the financial penalty, the SRA assessed the seriousness of the misconduct as “more serious” and the impact as “low”. Taken together, this placed the penalty in Band B under the regulator’s guidance, indicating a sanction of between 0.4% and 1.2% of the firm’s annual domestic turnover. A starting figure of £15,245 was reduced to £12,958 in recognition of mitigating factors, including the firm’s cooperation with the investigation, the eventual implementation of a compliant risk assessment, and the absence of consumer harm.
The regulator emphasised that the agreed outcome serves as a deterrent to other firms and demonstrates the importance of ensuring that statutory obligations on anti-money laundering compliance are taken seriously. Under the terms of the settlement, Pearcelegal accepted that it will not deny the admissions recorded in the agreement or act inconsistently with them. Any breach of that commitment could lead to further disciplinary proceedings or referral to the Solicitors Disciplinary Tribunal.
The SRA said it considered the sanction proportionate and in the public interest, adding that it reinforced the expectation that firms within the profession comply fully with their anti-money laundering duties.