Obaseki & Co Limited fined £9,000 for money laundering breaches and improper transfers causing client account shortage.
By Law News
The firm's misconduct primarily revolved around a conveyancing transaction conducted between May and October 2021
During this period, Obaseki & Co Limited failed to comply with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs 2017). They neglected to conduct proper client due diligence, failed to perform source of funds checks, and lacked adequate documentation.
Moreover, the firm accepted over £500,000 into its client account from unconnected third parties outside the jurisdiction without proper explanation or evidence of the source of funds. This raised significant concerns regarding potential money laundering activities.
Additionally, Obaseki & Co Limited improperly transferred over £4,000 from its client account to its office account in September 2021 without valid reasons. These transfers were made without proper invoicing to the clients concerned, indicating a lack of transparency and accountability.
The firm's actions resulted in a client account cash shortage of £4,327.24 as of September 2021, further exacerbating the misconduct. Despite holding client money for an extended period, Obaseki & Co Limited failed to promptly return it when there was no longer a legitimate reason to hold it.
As a result of these serious breaches, the firm was directed to pay a financial penalty of £9,000 and ordered to cover costs of £1,350. The decision on sanction took into account various factors, including the severity of the breaches, the potential harm to the public interest, and the firm's limited mitigation efforts.
While the breaches were found on only one file, the gravity of the violations warranted a significant penalty. Although the client account shortage had been partially replaced, it did not absolve the firm of its regulatory obligations. Obaseki & Co Limited demonstrated some limited insight by resolving to handle residual balances more efficiently and amending its internal Anti-Money Laundering (AML) guidance.
Overall, the firm's misconduct was considered serious and posed a threat to public confidence in the legal profession. The imposed penalty reflects the severity of the breaches and underscores the importance of compliance with regulatory obligations to prevent financial misconduct and safeguard the interests of clients and the public.