Solicitor fined for failing to identify fraud risks in two high-value loan transactions
Paul Edmund Levy, a solicitor with over two decades of experience, has been fined £15,000 by the Solicitors Disciplinary Tribunal (SDT) after failing to spot money laundering red flags in two loans totalling £464,000. While the tribunal approved an application by the Solicitors Regulation Authority (SRA) to withdraw an allegation of manifest incompetence, it still found that Mr Levy’s actions contributed to the failure of his former firm, Singhania & Co, to comply with the Money Laundering Regulations 2017 (MLRs).
Mr Levy, who had worked at the firm until its closure in 2021, admitted his failure to identify or respond to several indicators of fraud and money laundering in two loan transactions. The loans were tied to individuals who were potentially victims of fraud, causing significant harm to both clients and other parties involved.
In 2019, Mr Levy was instructed to act on a loan of £199,000 to Person A. The solicitor became suspicious when the solicitors acting for Person A changed midway through the transaction without explanation. He was also asked to send the loan money to a trust corporation and two individuals who were not the borrower, which violated the stipulated procedure in the loan agreement.
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A couple of months later, Mr Levy was involved in another loan transaction, this time for £265,000 to Person B. Again, the solicitors who ostensibly represented Person B turned out to be imposters, and Mr Levy was directed to transfer the loan money to a company unrelated to the borrower, contrary to the terms of the loan agreement.
The SDT ruled that Mr Levy’s actions, whether deliberate or not, had effectively facilitated transactions that displayed signs of fraud and money laundering. The tribunal considered Mr Levy’s reliance on due diligence conducted by another party as a key error, as well as his failure to question the red flags present in the transactions. The loans’ high interest rates and short repayment terms should have raised immediate concerns, the tribunal noted.
In mitigation, Mr Levy argued that he had been financially exposed in the transactions and had relied on a trusted individual with whom he had worked for years. However, the tribunal criticized his failure to take full responsibility and acknowledged that, as an experienced solicitor, he should have raised the necessary questions and acted with more caution.
The tribunal did acknowledge that Mr Levy had cooperated with the SRA and had shown some insight into his misconduct. Since the incidents, he has undertaken substantial Anti-Money Laundering (AML) training, though he did not provide certificates to verify this. Mr Levy is now the Money Laundering Reporting Officer (MLRO) at his current firm, but his previous lapses have led to the fine and the requirement to pay £35,300 in costs.