AMANDA SHAW SOLICITORS LIMITED

Decision - Agreement

Outcome: Regulatory settlement agreement

Outcome date: 15 November 2024

Published date: 10 December 2024

Firm details

No detail provided:

Outcome details

This outcome was reached by agreement.

Decision details

1. Agreed outcome

1.1 Amanda Shaw Solicitors Limited (the Firm), now a licensed body but was a recognised body at the time of the misconduct, authorised and regulated by the Solicitors Regulation Authority (SRA), agrees to the following outcome to the investigation:

1. Amanda Shaw Solicitors Limited will pay a financial penalty in the sum of £12,768, under Rule 3.1(b) of the SRA Regulatory and Disciplinary Procedure Rules;
2. to the publication of this agreement, under Rule 9.2 of the SRA Regulatory and Disciplinary Procedure Rules; and
3. Amanda Shaw Solicitors Limited will pay the costs of the investigation of £600, under Rule 10.1 and Schedule 1 of the SRA Regulatory and Disciplinary Procedure Rules.

2. Summary of Facts

2.1 We carried out an investigation into the firm following a desk-based review (DBR) by our AML Proactive Supervision team.

2.2 Our DBR identified areas of concern in relation to the firm's compliance with the Money Laundering, Terrorist Financing (Information on the Payer) Regulations 2017 (MLRs 2017), the SRA Principles 2011, the SRA Code of Conduct 2011, the SRA Principles 2019 and the SRA Code of Conduct for Firms 2019.

Firm-wide risk assessment (FWRA)

2.3 Between 26 June 2017 and 24 May 2024, failed to have in place an appropriate assessment of the risks of money laundering and terrorist financing to which its business was subject (a firm-wide risk assessment (FWRA)), pursuant to Regulation 18(1) and 18(4) of the MLRs 2017.

2.4 The FWRA provided for the DBR was not considered compliant with Regulation 18, as the document assessed more general risks rather than AML risks. Furthermore, it did not assess all five mandatory risk areas as set out in Regulation 18(2)(b) of the MLRs 2017

2.5 The firm is required to have a FWRA which includes details of the firm's assessment of risks in five key areas. Despite the firm's current compliance with Regulation 18 of the MLRs 2017, it was not compliant for the period from 26 June 2017 to 24 May 2024.

2.6 On 24 May 2024, an updated FWRA was provided to us which is compliant with Regulation 18 of the MLRs 2017.

Client and matter risk assessments (CMRA)

2.7 Between 26 June 2017 and March 2023, failed to maintain records of its risk assessments under Regulation 28 of the MLRs 2017. Therefore, the firm was unable to demonstrate that the extent of the measures it had taken to satisfy the requirements of Regulation 28 were appropriate, as required by Regulation 28(16) of the MLRs 2017.

2.8 Prior to March 2023, the firm stated that all files were reviewed at inception to determine whether the file was low or high risk. The file was marked high risk if appropriate, otherwise it was not marked. This is not considered compliant with Regulations 28(12) and 28(13) of the MLRs 2017.

2.9 Risk assessing clients and their matters is a mandatory requirement under Regulations 28(12) and 28(13) of the MLRs 2017. CMRAs must be documented, rate the risks that the fee earner identifies, and justify the risk with a supporting rationale. Despite the firm's current compliance, it failed to document CMRAs prior to March 2023.

2.10 The firm has adopted the use of the SRA's CMRA template. We are now satisfied that the firm's CMRAs meet the requirements of Regulation 28 of the MLRs 2017.

3. Admissions

3.1 The firm admits, and the SRA accepts, that by failing to comply with the MLRs 2017:

From 26 June 2017 to 24 November 2019 (when the SRA Handbook 2011 was in force), the firm has breached:

1. Principle 6 of the SRA Principles 2011 – which states you must behave in a way that maintains the trust the public places in you and in the provision of legal services.
2. Principle 8 of the SRA Principles 2011 – which states you must run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial risk management principles.

And the firm has failed to achieve:

3. Outcome 7.2 of the SRA Code of Conduct 2011 – which states you have effective systems and controls in place to achieve and comply with all the Principles, rules and outcomes and other requirements of the Handbook, where applicable.
4. Outcome 7.5 of the SRA Code of Conduct 2011 – which states you comply with legislation applicable to your business, including anti-money laundering and data protection legislation.

And from 25 November 2019 (when the SRA Standards and Regulations came into force) until May 2024, the firm has breached:

5. Principle 2 of the SRA Principles 2019 – which states you act in a way that upholds public trust and confidence in the solicitors' profession and in legal services provided by authorised persons.
6. Paragraph 2.1(a) of the SRA Code of Conduct for Firms – which states you have effective governance structures, arrangements, systems and controls in place that ensure you comply with all the SRA's regulatory arrangements, as well as with other regulatory and legislative requirements, which apply to you.
7. Paragraph 3.1 of the SRA Code of Conduct for Firms 2019 – which states that you keep up to date with and follow the law and regulation governing the way you work.

4. Why a fine is an appropriate outcome

4.1 The conduct showed a disregard for statutory and regulatory obligations and had the potential to cause harm, by facilitating dubious transactions that could have led to money laundering (and/or terrorist financing). This could have been avoided had the firm established adequate AML documentation and controls.

4.2 It was incumbent on the firm to meet the requirements set out in the MLRs 2017. The firm failed to do so. The public would expect a firm of solicitors to comply with its legal and regulatory obligations, to protect against these risks as a bare minimum.

4.3 The SRA considers that a fine is the appropriate outcome because:

1. The agreed outcome is a proportionate outcome in the public interest because it creates a credible deterrent to others and the issuing of such a sanction signifies the risk to the public, and the legal sector, that arises when solicitors do not comply with anti-money laundering legislation and their professional regulatory rules.
2. There has been no evidence of harm to consumers or third parties and there is a low risk of repetition.
3. The firm has assisted the SRA throughout the investigation and has shown remorse for its actions.
4. The firm did not financially benefit from the misconduct.

4.4 Rule 4.1 of the Regulatory and Disciplinary Procedure Rules states that a financial penalty may be appropriate to maintain professional standards and uphold public confidence in the solicitors' profession and in legal services provided by authorised persons. There is nothing within this Agreement which conflicts with Rule 4.1 of the Regulatory and Disciplinary Rules and on that basis, a financial penalty is appropriate.

5. Amount of the fine

5.1 The amount of the fine has been calculated in line with the SRA's published guidance on its approach to setting an appropriate financial penalty (the Guidance).

5.2 Having regard to the Guidance, we and the firm agree that the nature of the misconduct was less serious (score of one). This is because the firm promptly brought itself into compliance following the issues highlighted in the DBR. We therefore consider that the firm's conduct did not continue after it was known to be improper.

5.3 The harm or risk of harm is assessed as being medium (score of four). This is because failing to ensure it had a compliant FWRA and documented CMRAs in place left the firm vulnerable to the risks of money laundering, particularly in relation to its conveyancing work.

5.4 The 'nature' of the conduct and the 'impact of harm or risk of harm' added together, give a score of five (one plus four). This places the penalty in Band 'B', as directed by the Guidance.

5.5 We and the firm agree the financial penalty to be in Band B3, which determines a basic penalty of 1.2% of annual domestic turnover (firms).

5.6 The latest declared annual domestic turnover, to be used in the calculation of the financial penalty, is £1,330,000.

5.7 The basic penalty is therefore £15,960 (£1,330,000 x 1.2/100).

5.8 We have also considered mitigating factors and consider that the basic penalty should be discounted by 20%. This is to take account of the following factors as indicated by the Guidance:

1. Remedying harm - the firm took prompt steps to rectify the non-compliant documents and is now compliant with the MLRs 2017.
2. Cooperating with the investigation - the firm has cooperated with the SRA's AML Proactive Supervision and AML Investigations teams.

5.9 The adjusted penalty is therefore £12,768.

5.10 The firm does not appear to have made any financial gain or received any other benefit as a result of its conduct. Therefore, no adjustment is necessary and the financial penalty is £12,768.

6. Publication

6.1 Rule 9.2 of the SRA Regulatory and Disciplinary Procedure Rules states that any decision under Rule 3.1 or 3.2, including a Financial Penalty, shall be published unless the particular circumstances outweigh the public interest in publication.

6.2 The SRA considers it appropriate that this agreement is published as there are no circumstances that outweigh the public interest in publication and it is in the interest of transparency in the regulatory and disciplinary process.

7. Acting in a way which is inconsistent with this agreement

7.1 The firm agrees that it will not act in any way which is inconsistent with this agreement, such as by denying responsibility for the conduct referred to above. This may result in a further disciplinary sanction.

7.2 Acting in a way which is inconsistent with this agreement may also constitute a separate breach of Principles 1, 2 and 5 of the SRA Principles and paragraph 3.2 of the Code of Conduct for Firms.

8. Costs

8.1 Amanda Shaw Solicitors Limited agrees to pay the costs of the SRA's investigation in the sum of £600. Such costs are due within 28 days of a statement of costs due being issued by the SRA.