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Mishcon preparing for its IPO.


Mishcon de Reya has agreed to pay a fine of £232,500 for multiple breaches of money laundering rules. It is also paying the Solicitors Regulation Authority's £50,000 costs.

In an agreed outcome published this week, the firm admitted that it did not retain due diligence documents in relation to two clients between 2017 and 2018 when the acquisitions they were making presented a "higher risk of money laundering or terrorist financing" because they involved companies in high-risk jurisdictions.

The SRA said Mishcon's hard copy of the information "appears to have been misplaced" and that electronic records were not kept.

The clients were also allowed to treat the firm's client account as a banking facility, in breach of SRA accounting rules. A payment of £965k was paid into the firm's client account and three payments amounting to $1,119,015 were paid out, none of which related to the underlying legal matters on which Mishcon was instructed.

Mishcon commissioned an external investigation into the incidents which determined that the partner responsible, who is no longer with the firm, had not received the anti-money laundering training normally provided by Mishcon because of a "personal absence".

In a separate set of failings, the firm acted in three property transactions where due diligence was not carried out on the three special purpose vehicles created for the transactions, nor fully retained on the ultimate beneficial owner. 

When the SRA requested a copy of the firm’s practice-wide risk assessment in September 2018, it found that Mishcon "did not at that time have in place such a risk assessment". A policy was subsequently commissioned from an external provider and supplied to the SRA in 2019.

The SRA said the huge penalty levied on the firm equated to 0.25% of its £155m turnover, reduced by 40% to take account of mitigating factors.

These included the firm's "genuine insight into its management of risk and actions during the relevant periods", and the fact that it amended its policies and brought in "more sophisticated IT systems which involve increasingly centralised record-keeping".

A spokesperson for the firm said, "We are pleased to have come to a settlement with the SRA relating to two separate and historic investigations in relation to which we have made appropriate admissions. Mitigating factors such as our cooperation with the SRA throughout the investigations and the corrective action we have taken since to prevent a recurrence have been recognised by the SRA in reaching this outcome".

In October 2021 the firm was fined £25,000 by the SDT after another regulatory hiccup when it allowed its client account to be used to pay agents involved in football transfers. 

The resolution of the latest snafu means the naughty cupboard is one skeleton lighter, and just in time for the firm's planned float on the stock exchange, when every employee is set to receive an unconfirmed number of shares in the business.

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Comments

Dearie 07 January 22 10:24

At partner level does one really need training (probably for the 50th time) that client accounts can only be used for matters relating to the legal services provided? Seems a very cheap settlement.

Anonymous 07 January 22 14:28

This is a firm which has some previous acting for "family trust" money in dubious, tax-haven jurisdictions, according the Panama Papers:

https://offshoreleaks.icij.org/nodes/11010907

I doubt this will be the only time it's happened.

Daft lad 07 January 22 15:28

Scottish lawyer here. Can anyone explain the whole thing about west end firms on the forums beee and elsewhere? 

Anonymous 07 January 22 16:49

In answer to Daft lad's question, firms based in the City of London with an EC postcode like to think of themselves as "blue blood" acting for institutional clients. Firms in the West End are looked down upon by their City cousins. The traditional view is that West end firms act for spivs. It's all a load of snobbish baloney if you ask me but hey, whadda I know? I'm just a criminal legal aid lawyer practising actual law 

Anonymous 07 January 22 18:22

West End is full of chancers who never made it as far as the City, who act for the kind of people and "family trusts" based in the warmer parts of the world, who the compliance teams in City firms wouldn't allow you to touch with a 10ft clown pole.

Fred 07 January 22 18:31

Just listen to that shredding machine - it's been going all night long.

Now, where did I put that KYC and anti-money laundering documentation for that nice man from Astana....

Anonymous 07 January 22 23:23

"Im just a criminal legal aid lawyer practising actual law"

 

Lol.  Criminal law is easy. Mainly drink and drug offences along with burglary associates with funding it and domestic abuse.

The Real Story 08 January 22 10:42

Guess this is what happens to you when you piss off the government by getting the Prime Minister's advice ruled to be unlawful. An appearance before the SDT and a finding of professional misconduct and a £230k fine.

They can always find something on you. No one is whiter than white. Guess you should stop calling the Tories "racists", "knobs" and "bigots" and stop allowing your firm to be associated with one side of the political spectrum. Play both sides Mishcon unless you want to be be found guilty of "Mishconduct".

Lol.

Anonymous 08 January 22 13:53

" Mainly drink and drug offences along with burglary associates with funding it and domestic abuse."

 

Sorry. Missed that. Were you trying to say something? 

Anonymous 09 January 22 22:06

Criminal law is not easy. It is late nights, legal aid rates and bureaucracy, mad, dangerous people, brushes with people pushing to break the rules and your own sanity at stake. 

anon 10 January 22 05:12

@Daft lad 07 January 22 15:28 Basically everyone down south thinks they are better than someone else. US firm folk think they are god's gift while MC folk think they are nouveau riche types who couldn't make it at their firms. SC folk look down on those in the rest of the City while being looked down on by the MC and US firms. City types look down on West End types, thinking they all work for crooks. All of the above look down on anyone who doesn't work within the boundaries of greater London, thinking they are all regional yokels who while away their days drafting divorce settlements between strange men who have been jilted by the sheep they married. To top it all off, everyone working in the legal sector on the once mighty, freezing rock in the North Atlantic looks down on anyone who dare work offshore.

Hope this helps.

Tangent Boy 13 January 22 10:30

Heh @ criminal law being easy. It certainly seems to be a challenge for most posters on here.

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