There but for the grace of God go I… what every Compliance Officer secretly fears
This blog reflects on the growing pressure facing compliance officers, particularly as the SRA ramps up fines and prosecutions – even for historic breaches. It explores the reputational fallout that can hit COLPs, COFAs and MLROs when things go wrong, often unfairly.
While LinkedIn can be a useful space to share insights and stay up to date, the blog also calls out the unhelpful trend of using compliance failures to push products or score cheap points. Most importantly, it’s a reminder that compliance officers need support, resources, and community – because this could happen to any of us.
The SRA’s AML crackdown continues: Lessons from the latest £25k fine
The SRA has fined a firm £25,000 for failing to carry out proper source of funds and wealth checks on a high-risk client. The breaches were historic – but if they’d happened today, the fine could’ve been much higher under the SRA’s new unlimited fining powers.
Our latest post breaks down the decision, what went wrong, and why SOF/SOW checks are under the spotlight like never before.
TPMA webinar summary – in case you missed it!
On 26 March, we hosted a webinar on Third-Party Managed Accounts (TPMAs), exploring their benefits, risks, and practical considerations for solicitors. Thank you to Daniel Dunne of Interpolitan Money for his expert insight – it’s worth connecting with him on LinkedIn for future updates.
The discussion highlighted how TPMAs, essentially client accounts outsourced to regulated third-party providers, offer secure handling of client funds, potentially reducing compliance burdens and administrative tasks.
While the SRA consultation on solicitors’ ability to hold client money remains ongoing, firms were encouraged to proactively consider TPMAs strategically within their business planning, despite no immediate mandate expected from the SRA.
Practical points covered included due diligence when choosing a TPMA provider, assessing cybersecurity measures, service efficiency, and the potential impact on client interest and firm revenues.
To watch the full webinar recording (available free for 30 days), click here (passcode: Pna?3+nC).
If you want to learn more about TPMAs, consider registering for Gemstone Legal’s TPMA 101 session.
ICYMI: Mastering client matter risk assessments: Your shield against financial crime
Are your client and matter risk assessments (CMRAs) up to SRA standards?
SRA research reveals that nearly 1 in 5 files still fail to document client and matter risk assessments properly – putting law firms at risk of financial crime exposure and regulatory action.
In our latest blog, we provide a practical checklist, and share best practices for risk documentation that will keep your firm compliant and protected. Plus, read how one firm avoided an SRA fine by having airtight risk assessments in place.
Don’t leave compliance to chance—read the full guide now!
ICYMI: The fraud prevention tightrope: Navigating the UK’s new failure to prevent fraud offence
From 1 September 2025, the UK’s new “failure to prevent fraud” offence puts large organisations – including many law firms – under stricter scrutiny. If an employee commits fraud that benefits the firm, the firm itself could be held liable unless it can prove it had “reasonable procedures” in place to prevent fraud.
This isn’t just a theoretical risk. Think about inflated billing figures or supplier fraud – your firm could be caught. The stakes? Huge fines and reputational fallout.
But there’s good news: a strong compliance programme is your best defence. This means embedding fraud prevention into your risk assessments, training, and oversight—just as you already do for AML.
Read the full article to find out how to protect your firm.
News and Guidance
- International law firm fined £465,000 for sanctions breach during Moscow exit – Herbert Smith Freehills (HSF) was fined £465,000 by the UK’s Office of Financial Sanctions Implementation (OFSI) for breaching UK sanctions against Russia. The breaches involved six payments totalling approximately £3.9 million made by HSF’s Moscow office to sanctioned Russian banks in 2022. These transactions occurred during the firm’s expedited closure of its Moscow operations following Russia’s invasion of Ukraine.
The payments were attributed to human error and inadequate due diligence amid the hasty wind-down process. They included expenses such as redundancy settlements for staff with accounts at the sanctioned banks, audit fees, and insurance products. HSF voluntarily reported these breaches to OFSI, which led to a 50% reduction in the penalty from the potential £930,000. Despite requesting a ministerial review, the fine was upheld.
In response to the fine, Emma Reynolds, the Economic Secretary to the Treasury, is quoted in The Guardian as stating: “A just and lasting peace in Ukraine must be our priority, and UK financial sanctions continue to be essential to disrupting Russia’s war machine and putting Ukraine on the strongest footing possible.“
- SRA | Statement | Our approach to SLAPPs cases – The SRA has issued an unusual statement clarifying its approach to Strategic Lawsuits Against Public Participation (SLAPPs). This follows its decision not to take enforcement action against Discreet Law, the firm that represented the late Yevgeny Prigozhin, founder of the Wagner Group, in a defamation case against a journalist. The SRA says that while courts play a key role in identifying and striking out SLAPP claims, its own focus is on ensuring solicitors act ethically and do not facilitate abuse of the legal system. The regulator reiterated that solicitors must ensure cases they bring are properly arguable and should decline instructions where this is not the case.
This statement is unusual as it provides detailed reasoning behind a specific enforcement decision, which is not common practice for the SRA. It also highlights the ongoing challenges in addressing SLAPPs – should they be policed by the regulator, courts or Parliament?
- Legal Futures | Bellingcat founder accuses SRA of “shirking responsibility” over SLAPP – In response to the SRA statement, Bellingcat founder Eliot Higgins has accused the SRA of failing to hold Discreet Law accountable. Higgins, who was sued for simply retweeting articles written by others, described the action as a “clear abuse of the British legal system” and criticised the SRA’s decision not to act against the now-defunct firm.
The UK Anti-SLAPP Coalition has written to SRA chief executive Paul Philip, arguing that there is clear evidence Discreet Law knew the proceedings were abusive. They warn that the regulator’s stance risks setting a dangerous precedent – effectively giving firms a green light to pursue meritless claims aimed at silencing journalists without fear of regulatory consequences.
- Law Society | Practice Note | Cloud computing – The Law Society has published a new practice note on cloud computing, reflecting its growing adoption by legal practices of all sizes. It outlines the benefits – scalability, flexibility, and cost-efficiency – as well as the risks, particularly around data security, client confidentiality, and regulatory compliance.
The note covers:
- Types of cloud models (public, private, hybrid, and community)
- Common risks (service reliability, data lock-in, SLAs, and lawful access)
- Security and GDPR essentials
- Key considerations in procurement and contracts
A must-read for firms reviewing their IT infrastructure or switching to cloud-based case management or document systems.
- Spotlight on Corruption Report | Gatekeepers, enablers or technicians? The contested role of lawyers as facilitators of kleptocracy and grand corruption – A new report from Spotlight on Corruption (the anti-corruption NGO focused on transparency and accountability in public life) explores the role UK lawyers play in facilitating kleptocracy, state capture, and grand corruption. Based on extensive academic research, the study concludes that solicitors often provide essential services that help corrupt elites move and legitimise dirty money across borders.
The UK’s AML regime, while essential, is too narrowly focused on criminal activity – leaving a regulatory gap that allows “lawful but awful” transactions to proceed unchecked. This grey area forces lawyers and firms to make ethical choices about who they act for and what services they provide.
The report identifies four professional mindsets:
- Reformers, who call for stronger rules and professional accountability.
- Engaged sceptics, who see the problems but fear regulatory overreach.
- Minimalists, who prioritise legality over morality.
- Defenders, who reject the critique entirely and view it as a threat to legal independence.
It also pinpoints five ethical battlegrounds, including:
- Public interest vs client interest
- Law as a business vs law as a public service
- The right to representation vs freedom to refuse work
- Lawyers as neutral professionals vs moral agents
- Individual vs collective accountability
The report calls for legislative and regulatory reforms, better guidance for lawyers, and efforts to embed ethical considerations into firm culture – especially as the legal profession continues to commercialise.
Compliance corner – real life Q&As
Q: Does a solicitor’s trust corporation need its own SRA authorisation to be appointed as a deputy by the Court of Protection (CoP)?
A: Not necessarily. A solicitor-owned trust corporation does not need separate SRA authorisation to be appointed as a deputy by the Court of Protection (CoP), provided it is not delivering legal services to the public in its own right.
In the landmark case Re Various Incapacitated Persons (Appointment of Trust Corporations as Deputies) [2018] EWCOP 3, Senior Judge Hilder clarified the position. The CoP does not require a trust corporation to be regulated by the SRA – but it must be satisfied that an unregulated trust corporation is “reliable and trustworthy and has an appropriate level of skill and competence” to act as deputy.
To that end, a solicitor’s trust corporation must:
- Be lawfully entitled to act as a trust corporation within the meaning of the Mental Capacity Act 2005,
- Confirm that it will notify the Public Guardian if that status changes,
- Either be authorised by the SRA or meet specific safeguards, including:
- All directors being solicitors,
- Retaining the parent law firm to do the legal work,
- Being covered under the firm’s professional indemnity insurance.
These details must be set out in the COP4 declaration with additional information following the Schedule 2 requirements set out in the Hilder judgment.
The Law Society’s practice note (June 2024) supports this position and provides practical advice for law firms considering setting up their own trust corporations for deputyship and other fiduciary roles.
This is not legal advice. If you have a question you would like us to answer in this section, feel free to send it to info@jonathonbray.com
Free CPD
Recording: TPMAs – what you need to know
With potential regulatory change on the horizon, following the now-closed SRA consultation on managing client money, law firms are increasingly asking about third-party managed accounts (TPMAs). Are they the right solution? What are the risks? How do they compare to traditional client accounts?
To answer these questions, we hosted a free webinar with Daniel Dunne from Interpolitan Money, who shared expert insights.
We covered:
- The benefits and risks of TPMAs
- How TPMAs work in practice
- The impact of potential SRA changes
- Practical considerations for law firms (including what needs to be communicated to the SRA)
Watch the recording (passcode Pna?3+nC) – available for 30 days.
Next session (save the date): Wellbeing in the law
Date: Wednesday, April 30th
Time: 12:00pm
Join us for a special lunchtime webinar exploring wellbeing in the legal profession, featuring expert guests from LawCare, The Law Society, and The Solicitors’ Charity.
We’ll discuss the real challenges lawyers face, practical support available, and how firms can foster healthier, more sustainable working environments.
Open to all – free to attend. Invitation to follow – mark your calendars now!
SRA and SDT disciplinary decisions
- Kieran McLean – paralegal barred for holding himself out as a solicitor when signing off a settlement agreement, for an individual whom he pretended was a client of the firm.
- Victoria Powell – COFA of (now-defunct) consumer claims firm barred from legal practices for failing to report the true state of financial disarray at the firm during an SRA investigation.
- Elana Jalali – training contract hopeful removed from the profession for dishonestly accessing and using confidential assessment information during the course of employment.
- Chaida Aboobakar – personal injury paralegal barred for misleading the Court by fabricating an email in order to cover up a mistake.
- Anthony Fox – solicitor rebuked by the SRA for mishandling a complex employment tribunal claim. A lack of hearing preparation led to counsel withdrawing from representation and resulted in the tribunal striking out the claim, citing unreasonable conduct of litigation.
- Statham Gill Davies – firm fined £24,498 in the latest AML sting.
- A L Hughes & Co – £6,115 AML fine.
- R & A Solicitors Limited – £6,977 AML fine.
- White & Co – £4,283 AML fine.
- Sherwoods Solicitors Limited – £8,100 AML fine.
- PCB Lawyers LLP – £25,000 AML fine.
- Richardsons Solicitors – £5,124 AML fine.
- Bennett & Co – £3,305 AML fine.
- Wolf Law Solicitors Ltd – £5,215 AML fine.
- Howard Fitton Solicitors – £2,894 AML fine.
Friendly reminder: Staying on the roll
If you’re a non-practising solicitor and want to remain on the roll, you must actively apply via mySRA – it’s not automatic. The SRA’s annual process requires you to confirm your status and pay a £20 fee. Failure to apply means removal from the roll, so if you wish to keep your status, make sure to complete the process before the deadline. The application window is 3 April to 28 May 2025. For full details and to apply, visit the SRA website.
Training your team: Anti-money laundering
The SRA expects that all ‘relevant employees’ practicing within the scope of the Money Laundering Regulations (MLRs) must receive robust anti-money laundering (AML) training. Now is the time to ensure your firm is compliant. Failure to meet these obligations can result in significant fines and regulatory action.
Our comprehensive AML training is designed to equip your team with the knowledge and practical skills needed to identify, prevent, and report suspicious activities, safeguarding your firm from risk. Ensure your firm stays ahead of regulatory requirements and avoids potential pitfalls by enrolling your team today.
Formats available: Online | In person | On-demand
Don’t miss out—request a free quote today!
Safeguard your practice: Independent AML Audit
What we do – contact us for further information about our services
- Outsourced COLP and COFA support
- Compliance audits
- New firm and ABS applications
- Independent AML audits (Regulation 21)
- Training (online, remote, on demand)
- AML and GDPR workshops
- PII cost reduction
- Remote file reviews
- TPMAs
- Escrow accounts
- AML and sanctions searches
