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Disciplinary digest December 2017

12 December 2017

While most solicitors endeavour to comply with their anti-money laundering (AML) obligations and avoid being used as a conduit for offences such as mortgage fraud, there are some whose conduct falls significantly below expected standards.

The disciplinary digest covers Solicitors Disciplinary Tribunal (SDT) cases where AML compliance failings or involvement in mortgage fraud have been identified and contribute to the sanction imposed.

Firms may find these cases useful for identifying risks and educating staff members. All cases are on the SDT website. Appeals may have been lodged subsequent to publication.

SRA v Ernest Hedwa Mugadza

The allegations against Mr Mugdaza included recklessly facilitating five conveyancing transactions that bore the hallmarks of mortgage fraud and failing to comply with or ensure compliance with the Money Laundering Regulations 2007 in respect of at least one of the conveyancing transactions that bore the hallmarks of mortgage fraud. The respondent admitted the allegation in full. He was struck off and ordered to pay costs of £14,300.

Read the judgment

SRA v Juliet Bellis

One of the allegations against Ms Bellis was that she failed to maintain proper identification procedures in relation to investors in a scheme, contrary to Regulation 4 of the Money Laundering Regulations 2003.

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SRA v Frederick Brian Broadbridge & Stephen Peter Grimes

Two partners at a high street firm were sanctioned for multiple accounts rule breaches. In addition, Mr Grimes was found to have breached the Money Laundering Regulations 2007 as the due diligence checks he conducted on a company, its beneficial owner and source of funds were inadequate. Mr Grimes was held to have acted with a lack of integrity in breaching the Money Laundering Regulations 2007.

Mr Broadbridge and Mr Grimes were fined £35,000 and ordered to pay costs of £48,655.44 and had restrictions placed on their future practice.

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SRA v Daniel Mun Kin Tang

Mr Tang acted for a company in the purchase of three flats. The tribunal found that the transaction raised a number of ‘red flags’ indicating possible money laundering that Mr Tang had not addressed, including:

  • A deposit into the firm’s client account from an unconnected third party
  • A large sum of money being held following completion of the transaction
  • A request from an unconnected third party to transfer the surplus proceeds to another party
  • An undocumented loan to the purchaser
  • The fact that monies were received from outside the jurisdiction and paid out to an account within the jurisdiction.

The tribunal stated that, although minimal harm had been caused, it is ‘incumbent upon members of the profession to raise sufficient questions to satisfy themselves against the risks of potential money laundering concerns arising from any transaction, but particularly in any transaction that contained unusual features such as this one’.

Mr Tang was fined £7,500 and ordered to pay costs of £32,469.86.

Read the judgment


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