Mishcon preparing for its IPO.
Mishcon de Reya has agreed to pay a fine of £232,500 for multiple breaches of money laundering rules. It is also paying the Solicitors Regulation Authority's £50,000 costs.
In an agreed outcome published this week, the firm admitted that it did not retain due diligence documents in relation to two clients between 2017 and 2018 when the acquisitions they were making presented a "higher risk of money laundering or terrorist financing" because they involved companies in high-risk jurisdictions.
The SRA said Mishcon's hard copy of the information "appears to have been misplaced" and that electronic records were not kept.
The clients were also allowed to treat the firm's client account as a banking facility, in breach of SRA accounting rules. A payment of £965k was paid into the firm's client account and three payments amounting to $1,119,015 were paid out, none of which related to the underlying legal matters on which Mishcon was instructed.
Mishcon commissioned an external investigation into the incidents which determined that the partner responsible, who is no longer with the firm, had not received the anti-money laundering training normally provided by Mishcon because of a "personal absence".
In a separate set of failings, the firm acted in three property transactions where due diligence was not carried out on the three special purpose vehicles created for the transactions, nor fully retained on the ultimate beneficial owner.
When the SRA requested a copy of the firm’s practice-wide risk assessment in September 2018, it found that Mishcon "did not at that time have in place such a risk assessment". A policy was subsequently commissioned from an external provider and supplied to the SRA in 2019.
The SRA said the huge penalty levied on the firm equated to 0.25% of its £155m turnover, reduced by 40% to take account of mitigating factors.
These included the firm's "genuine insight into its management of risk and actions during the relevant periods", and the fact that it amended its policies and brought in "more sophisticated IT systems which involve increasingly centralised record-keeping".
A spokesperson for the firm 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".
In October 2021 the firm was fined £25,000 by the SDT after another regulatory hiccup when it allowed its client account to be used to pay agents involved in football transfers.
The resolution of the latest snafu means the naughty cupboard is one skeleton lighter, and just in time for the firm's planned float on the stock exchange, when every employee is set to receive an unconfirmed number of shares in the business.