SM Solicitors fined £3,264 and £600 costs after investigation finds major AML compliance lapses
The Solicitors Regulation Authority (SRA) has fined SM Solicitors, a Chester-based law firm, £3,264 after uncovering years of serious and sustained failures to comply with anti-money laundering (AML) regulations. The firm, a recognised sole practice located at Old Bank Buildings, Foregate Street, Chester, was also ordered to pay £600 in investigation costs following a regulatory settlement agreement published on 21 October 2025.
The SRA’s investigation began after an inspection by its AML Proactive Supervision Team, which found multiple areas of concern in the firm’s compliance with both the Money Laundering Regulations 2007 and the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. The regulator determined that the firm had repeatedly failed to maintain adequate AML policies, controls, and procedures for more than a decade, leaving it vulnerable to potential misuse.
Between October 2011 and April 2024, SM Solicitors failed to establish or maintain proper systems to mitigate and manage the risks of money laundering and terrorist financing. Investigators found that the firm had not carried out a documented firm-wide risk assessment for most of this period, breaching Regulations 18(1) and 18(4) of the 2017 regulations. It also failed to conduct client and matter risk assessments across all reviewed files, contrary to Regulation 28(12)(a)(ii), and neglected to perform appropriate customer due diligence on six cases.
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On four additional files, the firm failed to verify the source of client funds or adequately monitor transactions, breaching Regulation 28(11)(a). The SRA concluded that these repeated failings demonstrated a prolonged disregard for regulatory obligations and created a risk that the firm could be exploited for illicit financial purposes.
In its published decision, the SRA said SM Solicitors had breached multiple provisions of the SRA Principles and Code of Conduct, both under the 2011 Handbook and the updated 2019 Standards and Regulations. These included the duties to uphold public trust, maintain effective systems of control, and comply with legislation applicable to the business.
The regulator acknowledged, however, that the firm had since taken “meaningful steps” to correct its failings. SM Solicitors had reviewed its AML framework, updated its procedures, and ensured that current files now include appropriate customer due diligence, source of funds checks, and client risk assessments. The firm also cooperated fully with the SRA’s investigation and admitted the breaches at the earliest opportunity, factors which led to a reduction in the fine.
The SRA explained that a financial penalty was appropriate given the seriousness of the failings and their duration. “The conduct showed a disregard towards statutory and regulatory obligations and had the potential to cause harm,” the decision stated. The regulator assessed the nature of the conduct as “more serious” and the potential harm as “medium,” citing the risks created by the firm’s inadequate AML systems, especially in higher-risk work such as conveyancing.
Based on SM Solicitors’ annual turnover, the SRA initially calculated a basic penalty of £3,627 but reduced the figure to £3,264 in recognition of the firm’s cooperation and remediation efforts. The regulator emphasised that the fine was proportionate and aligned with its enforcement strategy, which seeks to uphold public confidence in the legal profession and deter similar breaches across the sector.
Under Rule 9.2 of the SRA’s Regulatory and Disciplinary Procedure Rules, the decision has been published in the public interest. The SRA confirmed there were no exceptional circumstances to justify withholding publication, stating that transparency is essential to maintaining trust in the profession.
The agreement also binds SM Solicitors to its admissions. Should the firm later deny or act inconsistently with the admissions made, the SRA may reconsider the conduct or refer the matter to the Solicitors Disciplinary Tribunal.
The SRA noted that SM Solicitors has since achieved full compliance with the Money Laundering Regulations and continues to operate as a recognised sole practice.