SDT 'Dismisses' Dentons AML case after the SRA is accused of taking a revisionist approach.

In a case brought by the Solicitors Regulation Authority [SRA] over charges of breaching money laundering regulations Dentons UK and Middle East LLP [Dentons] had been accused of failing to take adequate measures to establish a client’s source of wealth while acting for them between 2013 and 2017.

• https://www.sra.org.uk/consumers/solicitor-check/447523/

In the Solicitors Disciplinary Tribunal, SRA v. Dentons UK and Middle East LLP, case number 12476 / 2023, the SRA accused Dentons of having “FAILED TO:-

• Comply with its legal and regulatory obligations.
• Run the business effectively in accordance with proper governance and sound financial and risk management principles
• Maintain the trust the public places in the firm and in the provision of legal services.

At the heart of the case is Dentons client, who is subject to an anonymity order, is from an authoritarian former Soviet state with a reputation for high levels of corruption and was the chairman of a bank majority-owned by the state.

• https://www.lawgazette.co.uk/news/dentons-to-face-sdt-over-wealth-checks-on-former-client/5116764.article

The tribunal heard that Dentons, which took on the client following its merger in 2013 with legacy firm Salans:-

• Had relied upon its client relationship manager Francois Chateau to carry out checks on the client’s source of wealth and funds.
• There were no file notes dating from this period.

During the case international firm Dentons has accused the Solicitors Regulation Authority of taking a ‘revisionist approach’ in applying current anti-money laundering guidance to conduct going back 10 years.

Richard Coleman KC, representing the firm, told the Solicitors Disciplinary Tribunal that.

• The regulator had ‘lost sight of context’ by bringing the case against it.
• The SRA was prosecuting with a ‘2024 mindset’ by applying current guidance and regulations on anti-money laundering to conduct which took place over a decade ago.
• That according to the guidance and rules of the time, the firm took adequate measures to establish the client’s source of wealth and funds prior to the start of the business relationship.
• ‘The fundamental point at the heart of the case is that the firm acted in accordance with the guidance and standards at the time when the alleged breaches were committed.’
• The SRA was judging the firm on standards that were vague and not as clear as when they were revised in 2017.
• That SRA investigator Sean Grehan, who gave evidence to the tribunal on Tuesday, had given a ‘very strong personal view’ that documentary evidence of checks was required at the time.
• He was propounding opinions as the standards required to comply which were simply out of kilter with what the guidance said.
• The firm is not asking the tribunal to approve the approach taken as being appropriate today.
• The approach taken 10 years ago is not one that would pass muster today in the very different environment.
• If there was a breach, it was submitted, it was ‘entirely inadvertent’ and did not relate to the firm’s internal processes. Neither was there any evidence of any harm being done.

Grehan

• Had been cross-examined on Tuesday by Coleman who suggested the SRA was applying current guidance to historic conduct.
• Grehan told the tribunal he ‘completely disagreed’ and referenced the SRA interview with Chateau, when the French lawyer had said it was ‘not in European culture’ and ‘impolite’ to ask a client detail about their salary and financial situation.

The Solicitors Disciplinary Tribunal [SDT] has now [March 2024] announced it has dismissed the case and will not sanction Dentons. However, despite not sanctioning the firm, the SDT found.

• One allegation against Dentons was proven, relating to a breach of regulation 14 of the Money Laundering Regulations 2007.

An SRA spokesperson said:

• “We will await the SDT’s written judgment before deciding on any steps.”

In a statement following the dismissal of the case, Dentons added:

• We welcome the SDT’s finding that the SRA’s case is dismissed.
• There has been no breach of the SRA Principles and therefore no sanction against Dentons.
• It was accepted throughout the case that Dentons at the time had ‘gold standard’ AML systems and processes.
• Notwithstanding this, we recognise that risk management and regulatory compliance requires constant vigilance and attention and, since the period in question, we have significantly enhanced our capabilities and procedures.
• We remain committed to upholding the highest standards of professional conduct and have co-operated with the SRA throughout its investigation.

Sources

• SRA v. Dentons UK and Middle East LLP, case number 12476 / 2023, in the Solicitors Disciplinary Tribunal.

• https://www.lawgazette.co.uk/news/sra-has-lost-sight-of-context-on-prosecution-dentons-tells-tribunal/5118970.article

• https://www.lawgazette.co.uk/news/dentons-to-face-sdt-over-wealth-checks-on-former-client/5116764.article

• https://www.sra.org.uk/consumers/solicitor-check/447523/