UK Fines Law Firm for Failing to Conduct Sanctions Compliance Due Diligence
The U.K.'s Solicitors Regulation Authority fined British law firm Ashfords LLP about $128,000 for violating the country's anti-money laundering and terrorist financing regulations. The U.K. said Ashfords, in helping a property investment company conduct a transaction, failed to discover or act on a potential link between the company and one of its sanctioned beneficial owners.
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The U.K. said the violations stemmed from three conveyance transactions between October 2017 and March 2018. In one case, Ashfords acted on behalf of a buyer that was looking to purchase properties worth about $4 million and $694,000 on behalf of an unnamed limited company. In another case, Ashfords was "instructed in the purchase of a property" worth over $4 million on behalf of a U.K. registered charity.
The law firm failed to conduct or act on their due diligence findings in both cases, the U.K. said, adding that customer due diligence revealed "conflicting information as to" the buyer's "ultimate beneficial owner" and concerns about the source of the funds for the purchase. The country said both of those issues "were raised in an email by the firm’s compliance team and were purportedly addressed in a conversation with the fee earner," but there was "no written record into whether these issues were fully resolved before the transactions completed."
The U.K. said a "retrospective search" conducted by Ashfords found a potential link between one of the purported owners and a sanctioned entity.
In the purchase on behalf of the charity, a review of the charity's funds showed it didn't have enough money to complete the purchase, the U.K. said. The money for the purchase was instead loaned from one of the charity's trustees, though there was no source of funds information in relation to the trustee or the funds used. "While the firm’s compliance team had questioned the source of funds," the U.K. said, "it had failed to consider any AML risks on the basis that [the client] was a UK registered charity."
The U.K. said the "nature of the misconduct was less serious" because the firm submitted a report identifying its failings and because "the conduct was not intentional."