Clyde & Co fined £500k for anti-money laundering regulation breaches

Former chair of UK firm’s global marine practice group also fined for due diligence failures unearthed in 2018
CITY OF LONDON, LONDON-SEPTEMBER 7,2017: The St Botolph Building in high-tech architectural style on September 7, 2017 in London.

Clyde & Co's headquarters in the St Botolph Building Patrik Slezak; Shutterstock

Top 50 UK firm Clyde & Co has been fined £500,000 by the Solicitors Disciplinary Tribunal (SDT) – equalling the highest amount ever – after admitting that it failed to comply with anti-money laundering regulations. 

Former partner Edward Mills-Webb was also fined £11,900.  

The Solicitors Regulation Authority (SRA) referred Clydes and Mills-Webb to the SDT last August, after an investigation into possible breaches of anti-money laundering rules relating to an unnamed former shipping client.

Clydes began working with the client in 2014 and moved funds for it through an escrow account the firm managed that was used in respect of various ship purchases.  

The firm admitted that it failed to conduct adequate due diligence on the company and then failed to carry out adequate ongoing monitoring and apply enhanced customer due diligence measures. It also failed to conduct adequate due diligence on the principals involved in the transactions.  

Mills-Webb admitted that he “materially” contributed to these failures.  

There was no evidence that the client or its principals were involved in money laundering or financial crime. 

Mills-Webb, who now works as a consultant at City firm Preston Turnball which was set up in 2019 by a group of former Clydes partners, declined to comment through his representative firm, Herbert Smith Freehills. 

A spokesperson for Clydes said: “Clyde & Co sincerely regrets any compliance failings – relating to a series of client shipping transactions that we identified in 2018 – which led to this hearing. Having reported the issue to the SRA, we fully assisted with its investigation and have sought to learn appropriate lessons.     

“Under the firm’s current leadership, we have significantly enhanced our risk management and regulatory compliance capabilities including restructuring our in-house risk and legal functions; appointing a head of financial crime; and further enhancing our processes, policies, levels of oversight and training.    

“We hold ourselves to the highest professional and ethical standards and take responsibility for ensuring we meet them. This SDT determination is a reminder that regulatory compliance and risk management requires continuous, diligent attention. Our senior management is fully committed to ensuring firm-wide adherence.”  

Clydes received a base level fine of £50,000 which was increased to £500,000 on the basis of its size and revenue. The firm must also pay costs of £128,000; Mills-Webb was ordered to also pay costs of £55,000.    

The fine is the joint highest handed out by the SDT, matching that it imposed on US firm Locke Lord in 2017 for failing to adequately supervise a UK partner who engaged in ‘dubious financial arrangements’ with a client’s bank account. 

It is also the second fine issued by the SDT to Clydes in the past seven years. In 2017 the firm was fined £50,000 and three partners £10,000 each for breaching money laundering and accounting rules. 

Paul Philip, chief executive of the SRA, said: “Money laundering is not a victimless crime and firms have a key part to play in preventing legal services from being used by criminals. Firms must ensure they are playing proper attention to identifying clients and mitigating money laundering risks. 

“This fine should be a wake-up call to any firms that are not meeting their responsibilities to have robust AML processes in place, otherwise they could be facing a similar penalty.”

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