Solicitor fined for AML breaches

The Solicitors Disciplinary Tribunal has fined Khalid Sharif, a director and solicitor at Child & Child, who was also the firm’s MLRO £45,000 for failings under the (then) 2007 MLRs, which were also breaches of SRA Principles and rules. It found that, for just over a year, Mr Sharif:

• failed to take any or any adequate steps to ascertain whether  certain clients were PEPs or reportedly linked with the proceeds of crime;
• failed to apply EDD in a situation which was by nature high risk, non-face to face and which involved a transaction or business relationship with a PEP;
• acted in a transaction in circumstances which disclosed a high risk of money laundering; and
• in relation to an earlier transaction, failed to conduct ongoing monitoring, and acted in a matter that disclosed a significant risk that money laundering was taking place.

The firm had instructed a Panamanian law firm to incorporate a company in the BVI, of which their clients (X) would be the beneficial owners. The company would purchase 2 properties in London for £60m. Y, a long-standing client of the firm and the vendor of the properties, had introduced the transaction to the firm, but was not represented by it in the transaction. Ultimately the transaction did not proceed.

Mr Sharif had reviewed certain copy documents in relation to Y and confirmed they were adequate for CDD purposes, and determined that standard CDD was required for X. A box on the appropriate form asking whether any persons mentioned on the form were PEPs was ticked “no”. X were PEPs, and Mr Sharif admitted he had done no searches or asked any questions to establish whether they were or not.  He also admitted there was no basis for answering “no” on the form, and that he had breached the MLR, the SRA requirements and his firm’s AML policy.  He also admitted breaches because of his failure to identify that EDD should have been applied, and that he should have made further enquiries before accepting or continuing with instructions, and so fell materially below the standards expected of a senior solicitor in his position.

Mr Sharif was unable to offer any significant points in mitigation. The status of the clients had become clear on the release of the Panama papers. Mr Sharif had not in any way sought to hide the identity of the clients and had been open about the transaction. His main failing had been that of failing to identify the clients as PEPs. When he realised the issues, he voluntarily notified the regulator.

The Tribunal concluded that a fine of £45,000 was the appropriate sanction.