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Mishcon de Reya fined £232,500 for AML Failures

Richard Marley
January 06, 2022
3 minutes read
2466

London’s leading firm, Mishcon De Reya has been fined EUR 232,500 over failing Anti-Money Laundering (AML) regulations.

The company is also paying an additional EUR 50,000 to the Solicitors Regulation Authority (SRA) as a regulatory settlement so that this matter will not go to a disciplinary tribunal. This incident comes in the wake of Mishcon being fined EUR 25,000 by the Solicitors Disciplinary Tribunal for allowing the customer account to be used as a banking facility. However, the full ruling has not yet been published.

When Mishcon first revealed its intention the last April, stated that it “continues to engage with the Solicitors Regulation Authority on historic matters which it reported to the SRA”.

According to the SRA regulatory investigation between September 2015 and April 2017, Mishcon assisted two customers and corporate vehicles connected with them. Asset planning for one individual and the initial stages of the proposed acquisition of two separate entities. While the company stated that customer due diligence procedures were conducted for two clients, however, report copies were not retained. While some CDD documents were obtained for the corporate vehicles. Mishcon also admitted that both entities held a high risk of money laundering and terrorist financing because they were involved in business operations in high-risk jurisdictions, but it did not implement enhanced due diligence and ongoing monitoring required as a regulatory obligation.

Additionally, the capital belonging to one business vehicle was transferred to the client ledger from another corporate vehicle and used to discharge the company’s fees on the matter associated with the latter entity. An external investigation conducted by the company found that the unnamed former partner had not obtained the necessary AML training as per laws.

The SRA explained: “The firm secured CDD in relation to the ultimate beneficial owner but, because it opened each matter file in the name of a different entity in the corporate structure, the firm did not secure full CDD for each special purpose vehicle before each relevant transaction took place. The firm also did not retain copies of some of the CDD information obtained in relation to the ultimate beneficial owner, and in relation to another individual who instructed the firm on a fourth, related, matter.”

The firm also prepared a risk assessment by an external provider and was sent to SRA in May 2019.

In mitigation, Mishcon said it had shown “genuine insight into its management of risk and actions during the relevant periods” and has since amended its policies and procedures, “including introducing and investing in new, more sophisticated IT systems which involve increasingly centralized record-keeping and are, in part, specifically designed to prevent future breaches of the type addressed by this agreement”.

Mishcon had also “assisted the SRA throughout the investigation, admitted breaches, made changes to systems, policies, and procedures as a result, and ensured training to all relevant employees is regularly provided”.

A Mishcon de Reya spokeswoman 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 recognized by the SRA in reaching this outcome.”

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Danish Gambling Operator Reports Tipwin to the Police for AML Failings
Then danish gambling operator Spillemyndigheden has reported Tipwin to the police for violating the Danish Money Laundering act

According to the sources, Spillemyndigheden, the government office based in Odense, Denmark, has reported to the police that the business has failed to create risk assessments of retail bets with a lack of written policies on its retail offerings.

It is also worth mentioning that the operator also lacks complete business procedures and controls for the offerings based on land or in regards to money laundering until 25 May 2022.

In the official statement of the regulator to the police, it stated all the shortcomings of Tipwin in compliance with the anti-money laundering standards. It stated: “Spillemyndigheden notes that the rules on risk assessment, policies and business procedures are absolutely fundamental in the Money Laundering Act. By failing to prepare a risk assessment, Tipwin has not had a useful tool that has provided an overview and understanding of where and to what extent Tipwin is exposed to money laundering or terrorist financing, and what measures are in place are necessary to mitigate the risks involved.”

This clearly states that the german based gambling operator, Tipwin is exposed to the illicit crimes of money laundering and terrorist financing and has failed to comply with the AML regulations. The Danish regulator also focused on the lack of preparation from the operator on assessments of risks which are fundamental components of the anti-money laundering act.

Spillemyndigheden also added: “Preparing a risk assessment of the company’s business model is a very fundamental means of limiting the risk of money laundering. Tipwin has thus also not had policies and operational procedures that stem from the risk assessment. By failing to prepare a risk assessment, the Gambling Authority has therefore handed over the case to the police investigation.”

The authority also launched an injunction on the breach of rules and procedures in regard to the online casino and betting operations. With the main emphasis on money laundering, the regulator released a statement last month which reminded businesses in the industry of the obligations. It mentioned the regulations most firms are complied with, which are in order to prohibit the financial interactions with individuals, groups, legal bodies or countries.

In addition, Spillemyndigheden issued a 3 months deadline to Tipwin to sort out the situation.

Suggested Read: Danish Gaming Regulator Sanctions Unibet Over AML Violations

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While Australia’s vulnerability to money laundering and organized crime is obvious, firms that incorporate a robust AML Screening solution can steer clear of both money laundering and regulatory penalties. AML/CFT regulations oblige businesses to identify the ultimate beneficial owners and individuals who perform transactions for corporate customers. The FATF advises businesses to verify the identities of their customers through document verification checks and analyse the risk associated with them.

Shufti Pro’s AI-backed identity verification and Anti-Money Laundering (AML) screening solutions allow financial firms to adopt a risk-based approach. The globally acclaimed company offers services in 230+ countries and territories that ultimately overcomes the data transparency issues identified by FATF. In less than a second, financial organizations can get 98.67% accurate identity verification results.

To learn more about Shufti Pro’s AML Screening solution, get in touch with experts.

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Mishcon de Reya fined £232,500 for AML Failures

Crown and Star Casinos – A Stain on Australia’s Reputation

Australia’s Anti-Money Laundering Regime

How Casinos and Businesses Can Secure their Operations

What Shufti Pro Offers

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