International firm Dentons has accused the Solicitors Regulation Authority of taking a ‘revisionist approach’ in applying current anti-money laundering guidance to conduct going back 10 years.
Richard Coleman KC, representing the firm, told the Solicitors Disciplinary Tribunal today that the regulator had ‘lost sight of context’ by bringing the case against it.
The SRA alleges that Dentons failed to take adequate measures to establish a client’s source of wealth and/or funds from 2013 to 2017. The client, who is subject to an anonymity order, is from an authoritarian former Soviet state with a reputation for high levels of corruption, and was the chairman of a bank majority-owned by the state.
The tribunal heard on Monday that Dentons, which took on the client following its merger in 2013 with legacy firm Salans, had relied upon its client relationship manager Francois Chateau to carry out checks on the client’s source of wealth and funds. There were no file notes dating from this period.
Coleman said the SRA was prosecuting with a ‘2024 mindset’ by applying current guidance and regulations on anti-money laundering to conduct which took place over a decade ago. He said that according to the guidance and rules of the time, the firm took adequate measures to establish the client’s source of wealth and funds prior to the start of the business relationship.
Even if the tribunal found the firm breached the 2007 regulations (which the firm denied), any such breach was not sufficiently serious, reprehensible or culpable to warrant disciplinary sanctions.
Opening the firm’s defence today, Coleman said: ‘The fundamental point at the heart of the case is that the firm acted in accordance with the guidance and standards at the time when the alleged breaches were committed.’
He said the SRA was judging the firm on standards that were vague and not as clear as when they were revised in 2017.
Coleman said that SRA investigator Sean Grehan, who gave evidence to the tribunal on Tuesday, had given a ‘very strong personal view’ that documentary evidence of checks were required at the time.
‘He was propounding opinions as the standards required to comply which were simply out of kilter with what the guidance said,’ added Coleman. ‘The firm is not asking the tribunal to approve the approach taken as being appropriate today. The approach taken 10 years ago is not one that would pass muster today in the very different environment.’
If there was a breach, it was submitted, it was ‘entirely inadvertent’ and did not relate to the firm’s internal processes. Neither was there any evidence of any harm being done.
Grehan had been cross-examined on Tuesday by Coleman who suggested the SRA was applying current guidance to historic conduct.
Grehan told the tribunal he ‘completely disagreed’ and referenced the SRA interview with Chateau, when the French lawyer had said it was ‘not in European culture’ and ‘impolite’ to ask a client details about their salary and financial situation.
The hearing continues.
