Top UK Law Firm Fined Record Sum for Breaching Money Laundering Rules

Mishcon de Reya, one of the UK’s most prestigious law firms, has been fined a record amount for committing “serious breaches” of money-laundering rules.

The London-based firm has agreed to pay a fine of £232,500, plus a further £50,000 towards the costs of the investigation, which was carried out by the Solicitors Regulation Authority (SRA).

In its decision, published on Wednesday, the regulator said Mishcon de Reya’s conduct had “potential to cause significant harm by facilitating transactions that gave rise to a risk of facilitating money laundering”.

The SRA investigation concerned work the firm carried out for two unnamed individual clients between September 2015 and April 2017, and corporate vehicles connected with the same two individuals.

The work included the proposed acquisition of two separate entities that had “higher risk of money laundering or terrorist financing” under relevant money-laundering legislation, because they involved companies in high-risk jurisdictions.

The regulator found Mishcon de Reya failed to carry out the required level of due diligence or ongoing monitoring.

Additionally, between 22 July and 28 July 2016, a payment of £965,000 was made into Mishcon de Reya’s client account and three payments – the highest of $1,099,015, equivalent to £810,000 – were made out of it, none of which related to the delivery of services by the firm, contrary to SRA rules that forbid client accounts being used “as a banking facility”.

The firm accepted the SRA’s decision and fine, which is is almost double the previous highest of £124,436, imposed by the regulator on Find My Claims in 2019, for sending six million unsolicited marketing letters to members of the public in respect of mis-sold payment protection insurance (PPI).

A spokesperson for Mishcon de Reya disputed that the fine was the largest imposed by the SRA because the penalty covered two separate investigations rather than one.

The settlement will prevent the investigation looming over the firm as it prepares to float on the London Stock Exchange. The company is expected to seek a value of about £750m, based on typical valuations in the legal sector, a price tag that would make it the largest London-listed law firm, with every member of staff becoming a shareholder.

The firm is known for representing the wealthy, famous and powerful. High-profile cases include acting for Diana, Princess of Wales, during her divorce from Prince Charles and for Gina Miller when she took on the government over whether parliament had to approve the triggering of article 50 after the Brexit vote. Keir Starmer advised the firm while in parliament but ended the relationship when he became shadow Brexit secretary in 2016, subsequently turning down the offer of a lucrative second job with the firm.

The level of the SRA fine was based on 0.25% of turnover, in the middle of the band of up to 0.5%, because the SRA said “the breaches were serious but the risks did not crystallise into causing harm to clients or the wider public interest”. Based on Mishcon de Reya’s turnover of £155m, that would have been equivalent to £387,500 but it was reduced by the maximum allowable 40% discount to reflect mitigating circumstances.

A Mishcon de Reya spokesperson said: “We are pleased to have come to a settlement with the SRA relating to two separate and historic investigations in relation to which we have made appropriate admissions. Mitigating factors such as our cooperation with the SRA throughout the investigations and the corrective action we have taken since to prevent a recurrence have been recognised by the SRA in reaching this outcome.”

Article credit: https://www.theguardian.com/law/2022/jan/06/top-uk-law-firm-fined-record-sum-serious-money-laundering-rule-breaches-mishcon-de-reya