FinCrime Central - Latest AML/CFT News & Vendor Directory

Simpson Thacher & Barlett, a Prestigious US Law firm, hit with £300K AML Fine for Serious Compliance Shortcomings

Simpson Thacher & Bartlett, a prestigious US law firm, has been handed a £300,000 fine for failing to adhere to anti-money laundering (AML) regulations at its London office. This fine, the largest of its kind, underscores the critical importance of robust AML risk assessments and procedures within law firms. Despite no evidence of actual money laundering activities, the case highlights the need for law firms to maintain compliance with AML regulations to prevent any potential vulnerabilities.

This article delves into the specifics of the Simpson Thacher case, exploring the reasons behind the fine, the firm’s response, and the broader implications for law firms operating in the UK. By examining the details, we can gain insights into the evolving regulatory landscape and the challenges law firms face in maintaining AML compliance.

In March 2025, Simpson Thacher & Bartlett was fined £300,000 after an investigation by the Solicitors Regulation Authority (SRA) uncovered significant deficiencies in its AML practices. These deficiencies spanned several years, with the firm failing to implement a comprehensive risk assessment framework for its London operations. Between June 2017 and March 2020, the firm did not conduct firm-wide risk assessments, an essential requirement under the Money Laundering Regulations 2017.

Moreover, Simpson Thacher failed to carry out proper client and matter risk assessments for four files between June 2017 and October 2022. These failures were compounded by a lack of compliant AML policies, controls, and procedures between June 2017 and January 2023. These oversights were significant breaches of the UK’s Money Laundering Regulations, which impose stringent requirements on firms to implement and enforce AML measures.

While the firm acknowledged the shortcomings, it was important to note that the breaches were historical, and no actual instances of money laundering were discovered. Nonetheless, the SRA considered the failures severe enough to impose the fine, marking a significant moment in the enforcement of AML regulations for law firms.

The Role of the Solicitors Regulation Authority (SRA)

The Solicitors Regulation Authority (SRA) plays a pivotal role in ensuring that law firms comply with the UK’s anti-money laundering laws. Through its proactive supervision team, the SRA conducts regular reviews of firms’ AML controls to ensure compliance. In Simpson Thacher’s case, it was a routine desk-based review that uncovered the firm’s failure to meet AML requirements.

The SRA’s approach to enforcement has become increasingly stringent, particularly as the UK’s regulatory environment surrounding economic crime evolves. The Economic Crime and Corporate Transparency Act 2023, which grants the SRA unlimited fining powers for economic crime-related breaches, further underscores the seriousness with which the regulator views non-compliance.

As part of the enforcement process, the SRA referred Simpson Thacher’s case to the Solicitors Disciplinary Tribunal (SDT) in November 2023. The SDT approved an agreed outcome between the firm and the SRA, resulting in the £300,000 fine. This case sets a precedent for future enforcement actions, particularly for large law firms that may assume their size or global operations shield them from regulatory scrutiny.

Simpson Thacher’s Response and Compliance Measures

Simpson Thacher expressed regret over the historic deficiencies in its AML policies and procedures. The firm acknowledged the importance of maintaining robust compliance systems and emphasized the steps it has taken to rectify the situation. “We are pleased that the tribunal has accepted the resolution agreed with the SRA in respect of this matter,” said a spokeswoman for the firm. “The London office of Simpson Thacher & Bartlett LLP acknowledges and regrets certain historic shortcomings in some of our UK AML written policies and procedures and has made significant investments to enhance our robust compliance function.”

In response to the breaches, Simpson Thacher has made significant investments in strengthening its compliance framework. The firm has implemented more stringent risk assessments, improved its policies and procedures, and enhanced its internal controls to ensure full compliance with AML regulations going forward. These measures are in line with the firm’s commitment to ensuring that such lapses do not recur.

Legal and Regulatory Context for US Firms in the UK

For US law firms operating in the UK, compliance with AML regulations can be particularly challenging. Unlike their UK counterparts, US law firms are not subject to the same regulatory obligations from their parent firms. This can lead to discrepancies in compliance practices, as evidenced by Simpson Thacher’s case.

Regulatory experts note that the SRA’s enforcement actions are designed to bring US firms in line with the UK’s stricter regulatory standards. The UK’s Money Laundering Regulations 2017 impose a range of requirements, including the need for law firms to conduct risk assessments, establish proper controls, and monitor their client relationships to detect any signs of money laundering or terrorist financing.

While Simpson Thacher’s failure to meet these standards was significant, it serves as a reminder to other US law firms operating in the UK that they must be vigilant in ensuring compliance. The SRA’s willingness to impose substantial fines indicates that it will continue to hold firms accountable for any lapses in AML procedures.

The Broader Impact on the Legal Profession

The Simpson Thacher case is not an isolated incident. Over the past few years, the SRA has been increasingly active in sanctioning firms that fail to comply with AML regulations. Smaller firms have been fined for similar breaches, highlighting the importance of maintaining robust compliance frameworks, regardless of a firm’s size.

For law firms operating in the UK, the case also underscores the growing importance of having effective AML policies in place. The legal profession has a critical role to play in the fight against money laundering and economic crime. Law firms are often used as vehicles for money laundering due to the complex and confidential nature of their work, making it essential for them to have systems in place to detect and prevent such activities.

The imposition of significant fines, such as the one levied on Simpson Thacher, sends a clear message that the SRA will take AML non-compliance seriously. Law firms must take proactive steps to ensure their practices are in line with current regulations to avoid reputational damage, legal penalties, and potential involvement in money laundering activities.

Conclusion

Simpson Thacher’s £300,000 fine highlights the ongoing challenges law firms face in complying with AML regulations in the UK. Despite the firm’s swift efforts to address the deficiencies in its compliance framework, the case serves as a cautionary tale for other firms. It demonstrates the importance of implementing comprehensive risk assessments, maintaining robust AML procedures, and staying up-to-date with regulatory requirements.

For law firms, especially those with international operations, staying compliant with local and international AML standards is crucial. The evolving regulatory landscape, coupled with the increasing penalties for non-compliance, makes it essential for firms to prioritize AML compliance as part of their broader risk management strategies.