UK Law Firm Fined Record Sum for Money-Laundering

Blog / UK Law Firm Fined Record Sum for Money-Laundering

Mishcon de Reya, one of the most well-known law firms in the UK, has been fined a record sum for "severe violations" of money-laundering regulationsThe London-based business has agreed to pay a £232,500 fine, plus an additional £50,000 to cover the expenses of the inquiry, which was conducted by the Solicitors Regulation Authority (SRA). The regulator stated in its judgment, which was released on Wednesday that Mishcon de Reya's behavior had the "potential to cause considerable harm by enabling transactions that gave rise to a risk of aiding money laundering."

Outcomes of the Violation of SRA Rules

The SRA examination focused on work done by the business for two unnamed person customers between September 2015 and April 2017, as well as corporate entities associated with the same two people. The task featured the planned purchase of two independent organizations that constituted a "more significant risk of money laundering or terrorist financing" beneath pertinent money-laundering legislation due to their involvement with corporations in high-risk countries.

Mishcon de Reya was judged to have failed to perform the appropriate amount of due diligence or ongoing monitoring, according to the regulator. Likewise, between 22 and 28 July 2016, an amount of £965,000 was produced into Mishcon de Reya's client account, and three payments were made out of it, the highest of which was $1,099,015, equivalent to £810,000, none of which related to the firm's delivery of services, in violation of SRA rules that prohibit client accounts from being used "as a banking facility."

The company acknowledged the SRA's judgment and sanction, which is over double the previous maximum fine of £124,436 issued by the regulator on Find My Claims in 2019 to send six million unrequested trade letters to public members about mis-sold payment protection insurance.

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Denial of the Highest Punishment

A spokeswoman for Mishcon de Reya denied that the punishment was the highest issued by the SRA, claiming that the penalty was for two different investigations rather than one.

The agreement will keep the inquiry from hovering over the company as it seeks to list on the London Stock Exchange. Based on conventional legal values, the company is likely to seek a valuation of around £750 million, which would make it the most extensive London-listed law practice, with every employee becoming a shareholder.

The business is well-known for representing the rich, famous, and influential. Acting for Diana, Princess of Wales, during her divorce from Prince Charles, and Gina Miller, when she challenged the government over whether parliament needed to authorize the activation of Article 50 following the Brexit vote, were both high-profile instances. While in parliament, Keir Starmer advised the company but discontinued the partnership when he became shadow Brexit secretary in 2016, turning down a lucrative second position with the firm.

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The SRA Sanction

The SRA sanction was 0.25 percent of turnover, in the middle of a range of up to 0.5 percent, since the SRA said that "the breaches were severe, but the risks did not crystallize into causing harm to clients or the wider public interest." Based on Mishcon de Reya's £155 million in revenue, that would have been comparable to £387,500, but it was lowered by the maximum permissible 40% reduction to reflect mitigating circumstances.

"We are glad to have reached a resolution with the SRA pertaining to two distinct and historical investigations in respect to which we have made appropriate admissions," a Mishcon de Reya spokeswoman said. In addition, the SRA recognized mitigating circumstances such as our cooperation with the SRA throughout the investigations and the remedial action we have taken subsequently to prevent a recurrence in reaching this conclusion.

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