Richard Pearlman LLP fined after failing to properly conduct source of funds checks on client files
Richard Pearlman LLP, a recognised law firm based in London, has been fined £20,048 after an investigation revealed significant breaches of anti-money laundering (AML) regulations. The fine follows concerns raised by the Solicitors Regulation Authority (SRA) regarding the firm’s failure to conduct adequate source of funds (SoF) checks on client files.
The SRA’s investigation, which was prompted by an inspection from the AML Proactive Supervision Team, identified a series of failings in the firm’s compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017), and the SRA’s Principles and Code of Conduct. Six out of eight client files reviewed by the SRA failed to meet the required standards for SoF checks, in breach of Regulation 28(11)(a) of the MLRs 2017.
The firm admitted to the breaches and accepted responsibility, acknowledging that its failure to conduct sufficient checks could have facilitated money laundering or terrorist financing activities. While there was no evidence of harm to clients or third parties, the SRA considered that the firm’s actions put it at greater risk of being used for illegal financial activities, particularly given the high-risk nature of the firm’s conveyancing work.
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In addition to the fine, Richard Pearlman LLP agreed to pay £600 in costs for the investigation. The fine amount was calculated in accordance with SRA guidelines, with a reduction for the firm’s cooperation throughout the investigation and its steps to address the breaches. The firm has since instructed an external consultancy to improve its compliance procedures and has provided training to its fee earners on source of funds and source of wealth checks.
The SRA’s regulatory settlement agreement highlights the importance of ensuring all firms comply with AML regulations, particularly in sectors such as conveyancing, which is known to be vulnerable to money laundering risks. The firm’s failure to conduct sufficient checks on six of its client files was deemed a serious oversight, with the potential to facilitate criminal activity.
The SRA has made it clear that law firms must adhere strictly to AML regulations to maintain public trust and avoid undermining the legal profession’s role in safeguarding financial integrity. Richard Pearlman LLP, while remorseful, has committed to ensuring that similar breaches do not occur in the future, with ongoing training and updated procedures designed to bolster its compliance efforts.