SCHOFIELD SWEENEY LLP

Decision - Agreement

Outcome: Regulatory settlement agreement

Outcome date: 12 July 2021

Published date: 15 July 2021

Firm details

No detail provided:

Outcome details

This outcome was reached by agreement.

Decision details

1. Agreed outcome

1.1 Schofield Sweeney LLP (the Firm), a recognised body agrees to the following outcome to the investigation of its conduct by the Solicitors Regulation Authority (SRA):

1. it is rebuked
2. to the publication of this agreement
3. it will pay the costs of the investigation of £600.00.

2. Summary of Facts

2.1 On 5 June 2018 the Firm agreed to act in the sale of a residential property. The person instructing the firm (Mr A) purported to be the genuine owner of the property.

2.2 The Firm never met Mr A in person and therefore the relevant money laundering regulations required the firm to conduct enhanced customer due diligence in order to verify Mr A’s identity.

2.3 On 6 June 2018 the Firm asked Mr A to provide it with certified copies of his ID documents.

2.4 On or around 11 June 2018 Mr A sent the Firm copies of ID documents that had been certified by a genuine third party. The client identification process carried out by the third party was not compliant with the relevant money laundering regulations. The third party had only certified that the ID documents were true copies of the original documents. It had not however actually verified the genuine identity of Mr A.

2.5 The Firm accepted and relied upon the ID documents to verify Mr A’s identity.

2.6 The property was sold on 4 July 2018 and the Firm sent the net proceeds to Mr A on 5 July 2018.

2.7 The Metropolitan Police contacted the Firm on 14 August 2018 and confirmed it was investigating suspicions that the sale was fraudulent. The firm notified its indemnity insurers the next day.

2.8 The Firm did not notify its conduct to the SRA until 25 June 2019.

3. Admissions

3.1 The Firm admits and the SRA accepts that:

1. by failing to perform adequate customer due diligence at the material time as required under the relevant money laundering regulations in force at the time, it has:
   1. failed to behave in a way that maintains the trust the public places in the firm and in the provision of legal services, in breach of Principle 6 of the SRA Principles 2011 (the Principles in force at the time of the misconduct)
   2. failed to comply with its legal and regulatory obligations, in breach of Principle 7 of the SRA Principles 2011
   3. failed to run its business effectively and in accordance with proper governance and sound financial and risk management principles, in breach of Principle 8 of the SRA Principles 2011, and
   4. breached relevant anti-money laundering legislation and therefore failed to achieve Outcome 7.5 of the SRA Code of Conduct 2011
2. by failing to promptly report its failure to carry out adequate client due diligence to the SRA it has failed to achieve Outcome 10.3 of the SRA Code of Conduct 2011.

4. Why a written rebuke is an appropriate outcome

4.1 The SRA’s Enforcement Strategy sets out its approach to the use of its enforcement powers where there has been a failure to meet its standards or requirements.

4.2 When considering the appropriate sanctions and controls in this matter, the SRA has taken into account the admissions made by the Firm and the following mitigation which it has put forward:

1. this was an isolated incident and there is no pattern of this type of misconduct
2. the Firm has taken remedial action to mitigate the harm suffered by the buyers and the genuine owner of the property
3. the Firm has accepted its failures and taken steps to ensure it carries out adequate client due diligence in the future.

4.3 The SRA considers that a written rebuke is the appropriate outcome because:

1. there was a breach of statutory obligations and the Firm failed to carry out adequate client due diligence
2. there has been no evidence of lasting harm to consumers or third parties
3. there is a low risk of repetition
4. a public sanction is required in order to uphold public confidence in the delivery of legal services.

5. Publication

5.1 The SRA considers it appropriate that this agreement is published in the interests of transparency in the regulatory and disciplinary process. The Firm agrees to the publication of this agreement.

6. Acting in a way which is inconsistent with this agreement

6.1 The Firm agrees that it will not deny the admissions made in this agreement or act in any way which is inconsistent with it.

6.2 If the Firm denies the admissions or acts in a way which is inconsistent with this agreement, the conduct which is subject to this agreement may be considered further by the SRA. That may result in a disciplinary outcome or a referral to the Solicitors Disciplinary Tribunal on the original facts and allegations.

6.3 Acting in a way which is inconsistent with this agreement may also constitute a separate breach of principles 2 and 5 of the Principles and paragraph 3.2 of the Code of Conduct for Firms.

7. Costs

7.1 The Firm agrees to pay the costs of the SRA's investigation in the sum of £600.00. Such costs are due within 28 days of a statement of costs due being issued by the SRA.