Mackarness and Lunt has been fined £11,676 after a regulatory investigation discovered significant failures regarding its anti-money laundering frameworks and risk assessments. The Solicitors Regulation Authority reached this settlement with the firm following a proactive desk-based review that highlighted years of non-compliance. These omissions left the legal practice vulnerable to financial crime risks between 2017 and late 2025. The penalty reflects the seriousness of neglecting statutory obligations intended to prevent the flow of illicit funds through the legal sector. By accepting this regulatory settlement, the firm acknowledges its failure to uphold essential professional standards and governance requirements.
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Statutory Requirements for Firm-Wide Risk Assessment
Legal practices operating within the United Kingdom must strictly adhere to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. A central pillar of these regulations is the requirement for a comprehensive and documented evaluation of the specific threats a business faces. Mackarness and Lunt admitted that between June 2017 and 2023, it failed to maintain an up-to-date record of the risks of money laundering and terrorist financing to which its business was subject. This document, known as a firm-wide risk assessment, is not a mere formality but a foundational tool used to inform all other defensive measures. Without a clear understanding of where the firm is most susceptible to exploitation, it is impossible to implement effective safeguards against the placement or layering of criminal proceeds.
The failure to maintain this assessment for over six years meant the firm was operating without a clear map of its internal vulnerabilities. Regulatory bodies emphasize that risk assessments must be living documents, reflecting changes in the types of clients served, the jurisdictions involved, and the complexity of the legal services provided. When a firm neglects this duty, it creates a systemic blind spot that can be exploited by sophisticated money launderers. The Solicitors Regulation Authority noted that while there was no evidence of direct harm to clients or specific instances of money laundering having occurred, the potential for such harm was elevated due to these structural weaknesses. This lack of oversight contradicts the mandatory provisions of Regulation 18(4) of the 2017 regulations, which explicitly demands that firms keep an accurate and current record of their risk profile.
Deficiencies in Policies, Controls and Procedures
In addition to the absence of a robust risk assessment, the investigation revealed that the firm did not adequately maintain its internal policies, controls, and procedures. From June 2017 until November 2025, the firm failed to regularly review and update the manual of rules meant to guide staff in spotting and reporting suspicious activity. These protocols are the primary line of defense in any legal practice, covering everything from client due diligence to the reporting of suspicious activity to the National Crime Agency. Under Regulation 19(1)(b) of the 2017 statutes, firms are obligated to ensure their internal controls remain effective and aligned with current legal standards. The prolonged failure to update these mechanisms meant the firm’s defensive posture remained stagnant while the techniques used by financial criminals evolved.
The SRA Principles require solicitors to behave in a way that maintains public trust and to run their businesses effectively in accordance with sound risk management principles. By allowing its internal manuals to become outdated, the firm breached both the 2011 and 2019 versions of the professional code of conduct. Effective governance structures are essential for ensuring that all legislative requirements are met consistently across a firm. The absence of updated controls meant that staff may have been operating under obsolete guidelines, potentially missing red flags that a modern compliance framework would have identified. This situation highlights a broader issue within the legal profession where administrative compliance is sometimes sidelined in favor of operational demands, despite the high-stakes nature of financial crime prevention.
Financial Penalty and Regulatory Sanctions
The calculation of the £11,676 fine followed the specific guidelines set out by the regulator for financial penalties. The nature of the conduct was assessed as more serious because the firm only brought its environment into compliance after receiving direct intervention and guidance from the proactive supervision team. This suggests that without the external audit, the non-compliance might have persisted indefinitely. The base penalty was initially calculated at £13,737 based on the firm’s annual domestic turnover, reflecting a Band B category for moderate to serious breaches. However, the regulator allowed for a reduction to the final figure because the firm cooperated fully with the investigation, admitted the breaches at the earliest opportunity, and took immediate steps to rectify the identified weaknesses.
In addition to the fine, the firm was ordered to pay investigation costs of £600. The decision to publish the details of this agreement serves as a public reminder of the importance of maintaining rigorous anti-money laundering standards. The regulator stated that the penalty is a proportionate response to the public interest, as it creates a credible deterrent for other firms that might be tempted to overlook their regulatory duties. Transparency in these matters is intended to uphold the integrity of the legal profession, ensuring that clients and the wider public can trust that solicitors are not inadvertently facilitating financial crime. The firm has agreed not to deny the admissions or act inconsistently with the settlement, as doing so could lead to further disciplinary action or a referral to the Solicitors Disciplinary Tribunal.
Strengthening Internal Compliance Frameworks
The conclusion of this case underscores the necessity for legal practices to prioritize their compliance infrastructure. While the firm has now successfully amended its control environment to align with current laws, the period of non-compliance highlights how easily administrative duties can lapse over several years. Moving forward, the firm must ensure that its new policies are not just implemented but are also subject to the regular review cycles demanded by the law. The legal sector remains a high-target area for those seeking to legitimize illicit wealth, particularly through property transactions and complex corporate structures. Therefore, a static approach to risk management is fundamentally incompatible with the dynamic nature of modern financial crime.
Ultimately, the settlement highlights that regulators are increasingly using proactive desk-based reviews to identify systemic weaknesses before they result in a catastrophe. This proactive stance means that firms cannot wait for a specific incident to occur before checking their compliance status. The lessons from this case are clear for the wider legal community: the cost of maintaining a robust risk assessment and updated internal procedures is significantly lower than the financial and reputational damage caused by a regulatory fine. By maintaining a vigilant and updated anti-money laundering posture, firms protect not only their own practice but also the broader integrity of the global financial system. Continuous education and rigorous internal auditing are the only ways to ensure that a firm remains a hostile environment for money laundering activity.
Key Points
- Mackarness and Lunt received a fine of £11,676 for systemic failures in anti-money laundering compliance spanning over eight years.
- The firm admitted to failing to maintain a mandatory firm-wide risk assessment as required by Regulation 18 of the MLRs 2017.
- Internal policies and controls remained unreviewed and unupdated between 2017 and 2025 in violation of statutory duties.
- A regulatory settlement was reached after a proactive review by the Solicitors Regulation Authority identified the governance breaches.
- The fine was reduced from a higher base amount due to the firm’s early admissions and cooperation during the investigation.
Related Links
- Money Laundering Regulations 2017 Official UK Legislation
- SRA Anti-Money Laundering Guidance for Firms
- Financial Action Task Force Guidance for Legal Professionals
- SRA Enforcement Strategy and Financial Penalty Guidance
Other FinCrime Central Articles About SRA’s Relentless Actions
- Amphlett Lissimore Faces £114k SRA Fine for Anti-Money Laundering Failures
- SRA Crackdown Sees Huggins Lewis Foskett Pay £78,000 Over AML Failures
- The SRA Fines Solicitors Over £47k for Failing AML Checks: Key Lessons for Law Firms
Source: SRA
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