SDT fines a solicitor after AML scrutiny failures and lender update breaches in two property matters
A solicitor has been fined by the Solicitors Disciplinary Tribunal after admitting anti-money laundering failures in two conveyancing transactions and being found to have lacked integrity in one aspect of the case involving lender updates.
The tribunal heard that the Solicitors Regulation Authority brought proceedings against the solicitor for conduct while practising at Carter Devile. The allegations concerned two separate property purchases, described as Property A and Property B, involving large sums of non-mortgage funds paid into the firm’s client account by third parties.
In relation to Property A, the solicitor admitted that between June and October 2018, she failed adequately to scrutinise the source of funds supplied by third parties. The tribunal found that this caused or contributed to the firm breaching Regulation 28(11)(a) of the Money Laundering Regulations 2017. The tribunal accepted the admission in full.
The tribunal found a similar position in relation to Property B. It recorded that more than £234,000 in non-mortgage monies were received, with significant payments coming from individuals and a company associated with the client’s owner. The solicitor admitted that she failed adequately to scrutinise the source of funds, and the tribunal again found the allegation proved.
The SRA also alleged failures relating to the information provided to mortgage lenders. In the Property A matter, the solicitor admitted a breach of the duty to maintain public trust, but denied that her conduct lacked integrity. The tribunal accepted her evidence that she believed the funds came from the same individual through an entity he owned, and it was not satisfied that the SRA proved she consciously failed to update the lender. It therefore did not find a breach of integrity or an unfair advantage.
In the Property B matter, the tribunal took a different view. It found that by early February 2019 the solicitor knew the purchase funds were not coming solely from the client or the client’s owner, and that the lender was not aware of the true position. The tribunal concluded that her failure to ensure updated information was provided was not an inadvertent error. Applying the objective test for integrity, it found her conduct lacked integrity and that she took unfair advantage of the lender.
The tribunal imposed a financial penalty of £7,500 and ordered the solicitor to pay £12,000 in costs. It said the misconduct was repeated and serious, but accepted that the solicitor had shown insight, undertaken training, and introduced compliance procedures aimed at preventing any recurrence.