Compliance Corner: Mishcon De Reya, Solicitors Regulation Authority

Editorial Staff

10 January 2022

The , which oversees lawyers in England and Wales, has imposed a £232,500 ($315,732) penalty on , the London-based law firm, for failings over anti-money laundering procedures.

Mishcon de Reya will also pay the £50,000 costs of a probe into the matter, the SRA said in a statement on 20 December, and reported more widely in the media late last week.

The regulator’s actions cover a period from September 2015 to April 2017, when the law firm worked for two individual clients (unnamed in the SRA statement), and unnamed corporate vehicles connected with the same two individual clients. Mishcon de Reya’s work related to a non-SRA regulatory investigation, asset planning for one of the individuals, and the initial stages of the proposed acquisition of two separate entities (and the onward sale of one of them), the SRA said.

“While the firm believes that customer due diligence (CDD) was obtained in relation to the two individual clients, the firm did not retain the hard copy file of such documents, which appear to have been misplaced, and no electronic copy of the records was retained either,” the SRA said. The watchdog said that some documents, but not a full set of them, were obtained about one of the corporate vehicles involved in one of the proposed acquisitions.

The SRA said that the proposed acquisitions presented a “higher risk of money laundering or terrorist financing” under the relevant money laundering legislation in force at the time, because they involved companies in high-risk jurisdictions. Such a position meant that “enhanced customer due diligence (EDD) and ongoing monitoring client account.

“Lawyers need to understand what they are being asked to do, by whom, and why. If that doesn't stack up, press the alarm by talking to a peer, the Money Laundering Reporting Officer (MLRO) and/or external advisors. The consequences of getting things wrong are increasingly grim,” Alex Ktorides, head of risk management and ethics, Ince, said in a note last Friday on the matter.

“Some of the breaches, such as holding client money without doing related legal work, are UK-centric rules set by the SRA. But at their heart they are all essentially about having adequate systems and controls in place to spot potential criminals, and to know what to do if suspicions are reasonably aroused,” Ktorides added.