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News / Solicitors Disciplinary Tribunals Charged Clyde & Co. with £500,000 for Anti-Money Laundering Breaches

Solicitors Disciplinary Tribunals Charged Clyde & Co. with £500,000 for Anti-Money Laundering Breaches

Clyde & Co. charged for AML breaches with £500,000 fine, the highest charge across the legal industry in UK.

04 min read

In light of recent developments that have raised concerns across the legal industry, Clyde & Co. – one of the top 50 law firms in the UK has been fined by SDT with £500,000 for significant anti-money laundering breaches. These legal repercussions and fines imposed are the highest in history across the legal industry, nearly equivalent to the previously imposed fines on Dallas-based legal firm “Locke Lord” in 2017.

A comprehensive talk about recent developments mandates the need for a quick recap of how the case has been developing.

A Look into Progression of AML Failures

This isn’t the first time Clyde & Co. has gained attention due to their failure to comply with AML regulations.

A quick throwback to March 2017, Clyde & Co. was fined a £50,000 fine in response to their breaches of accounting and money laundering regulations. The repercussions didn’t end here.

The firm’s corporate partners Christopher Duffy and Simon Gamblin, alongside project partner Nick Purnell, were individually fined £10,000. Edward Mills Web, the firm’s former chair of the marine global practice group was also charged £11,900

The charges resulted from the use of the client bank account as their official banking facility. This marks a direct breach of the Solicitors Regulation Authority (SRA)’s money laundering rules.

The verdict from the tribunal directed immense focus toward Clyde & Co., as it raised concerns about a reputable law firm, making AML failures more serious and glaring.

Reputational Damages in Response to Legal Charges

The size of fines imposed (largest in the history of legal industry), frequency of being penalized by SDT (twice in the past 7 years), and nature of AML breaches (failure to comply with UK money laundering regulations) might have raised suspicion for clients and legal community about firm’s transparency, ethical conduct, and moral responsibility towards fair business operations to attract clients and talent.

Firm’s Response & Improvements in AML Measures

In light of legal proceedings of 2017, Clyde & Co alongside Ed. Mills Web contested the allegations before the case progressed towards the Solicitors Disciplinary Tribunal.

However, a spokesperson from SRA confirmed that both parties admitted to the breaches of anti-money laundering regulations.

In response to the need for improvement in AML compliance, a representative from the firm added, that we have significantly improved our risk management and compliance capabilities.

The recent development in the case depicts significant improvement in internal AML controls, in response to the aforementioned legal, financial, and reputational penalties, as confirmed by the lawyer.

The firm’s lawyer continued asserting that the misconduct was completely inadvertent and posed no threat to clients and third parties associated with Clyde & Co.

Key Takeaways:

It is said, “Money Laundering is a victim-less crime”. Despite the misconduct being backed by an inadvertent approach, it still results in negative consequences for the actor, higher scrutiny across the industry, and significant issues for clients and businesses, and hurts the financial integrity as a whole.

The case of Clyde & Co. serves as a critical reminder that the legal industry like many others is not immune to regulatory breaches. As anti-money laundering and compliance regulations continue to evolve, law firms must keep their internal controls strict enough to not let violations intensify. The heavy fines at the end of this case highlight the amount of scrutiny legal firms should be maintaining to stay compliant.

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Others

Industry

Legal & Law Enforcement

Published Date

January 16, 2024

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