Biggest Money Laundering Cases of All Time
by Niamh Hunter
National and well-established legal firm, Ashfords LLP, has been fined over £100,000 by the Solicitors Regulation Authority after they admitted a failure to carry out the required anti-money laundering checks on three property transactions between October 2017 and March 2018.
Following a report by the firm itself, Ashfords and the SRA agreed on the £101,357 fine, alongside investigation costs of £1,350, making it the fourth largest imposed penalty in the SRA’s history.
But what led to Ashfords’ fine, and how can businesses bolster their compliance processes to avoid similar penalties?
Paying the Price for Compliance
Details in the published report revealed that Ashfords had raised concerns with the SRA in 2019 regarding three conveyancing transactions, after undertaking their own internal investigations. It was during these searches that Ashfords identified a “potential link between one of the purported beneficial owners and an entity subject to UK sanctions,” according to the SRA.
Across all three transactions, the firm had acted on behalf of the property purchaser, whilst also being instructed by a third party property investment company with vested interests in the purchase. When assessing transactions one and two, concerns were raised regarding conflicting information about the ultimate beneficial owner.
This case and subsequent fine emphasise the importance of stringent due diligence practices and conduct comprehensive Anti-Money Laundering (AML) checks to ensure compliance with regulations. Ashfords suffered the consequences of oversight, whether intentional or unintentional, and the company became susceptible to a conflict of interest stemming from an unclear Ultimate Beneficial Owner (UBO).
To maintain compliance, Ashfords should have used software like Red Flag Alert to discover and document the current information, encompassing names, addresses, registration numbers, and details about management and other key personnel. Failure to do so compromises the accuracy and legitimacy of the transaction and the company information provided. As a result, neglecting these industry-standard AML regulations led to Ashfords facing a hefty fine, underscoring the importance of thorough due diligence.
The third transaction involved a UK charity. Ashfords worked on their property purchases, but shortly after Ashfords’ compliance team looked at the client file, three key concerns were raised:
- The firm was initially hired to buy the property for someone else before being asked to transfer it.
- The client didn't have enough money for the purchase, so the remaining amount was supposed to be lent to the charity by one of its trustees.
- The file didn't have information about where these funds were coming from, and there were no documents about the trustee lending the money.
According to the report, the firm acknowledged the concerns and communicated them with the responsible fee earner. However, due to a lack of documented evidence, there is no recorded resolution of these issues before the transactions were completed. Therefore, there was no evidence for an audit-trail, as required by AML regulations. This lack of record keeping could not confirm the legitimacy of the resolutions or the steps taken to remain compliant. With key evidence missing, the firm’s poor management was determined to be inadequate of the AML requirements demanded by law.
An Ashfords spokesperson said: ‘We self-reported in 2019 to the Solicitors Regulation Authority potential breaches of the money laundering regulations on three transactions that were carried out in 2017 and 2018.
‘We were registered as an ABS (alternative business structure) at the time so there is a higher threshold in relation to the SRA’s fining powers. We were scored at the lower end with the full discount applied.
‘Since our self report we have made substantial improvements to our anti-money laundering processes including through a more rigorous centralised client onboarding process, revised policies & procedures, and ongoing investment in our training & education programme across the business. We take our responsibilities under the Money Laundering Regulations and the SRA Principles and Code of Conduct extremely seriously.”
Preserve Your Professional Integrity with Red Flag Alert
The legal sector is no stranger to high stakes, tough competitors, and difficult obstacles. The industry is littered with pitfalls, leaving maintaining regulatory compliance a costly inconvenience. Red Flag Alert supports legal organisations across business operations, with our fast, accurate, and reliable state-of-the-art AML checks.
By using Red Flag Alert’s expertly designed AML checks, essential legal processes can be fulfilled. In turn, this removes the risk of sophisticated criminals exploiting businesses for financial gain, whilst protecting the business’ integrity and reputation.
In highly regulated sectors such as finance and legal, anti-money laundering checks are an unavoidable reality that must be stringently observed to avoid hefty fines or even prison time. Using software like Red Flag Alert, enables law firms to undertake thorough risk assessments associated with a client or transaction, and ensure due diligence that can be legally proven if needed.
Our extensive database can be used to confirm digital IDV checks across AML processes. By removing the potential for human error, customers can enjoy a streamlined experience through our self-service portal, and you can gather information about a client’s background digitally, identifying potential risks and taking the appropriate steps to mitigate them.
Rich West, CEO at Red Flag Alert, said that even the largest legal firms should adapt to new technology to support their AML strategy, as part of their commitment to preventing and reducing financial crime.
“What we’ve seen at Ashfords is that even large and established businesses in highly regulated sectors don’t always have their AML processes honed in. It’s worth remembering that anti-money laundering controls protect customers, as well as businesses, and should be a vital part of any risk management strategy to avoid significant weaknesses in their AML systems.”
Stay compliant and reduce the time spent screening customers, suppliers, partners and more with Red Flag Alert:
- Rely on verified, accurate reports to create due diligence reports for regulatory requirements.
- Complete accurate digital customer identity verification checks in minutes.
- Monitor clients against international blacklists for sanctions, politically exposed persons (PEPs) and more.
- Setting up monitoring alerts so you know as soon as your client’s risk profile changes.
- Access complete data on company directors and ultimate beneficial owners.
To discuss how Red Flag Alert’s AML services can optimise your processes, policies, and procedures, Try Red Flag Alert today.
