Clyde & Co ‘failed to join dots’ to spot failures in dirty money checks

Law firm Clyde & Co was handed a record fine after it failed to “join the dots” to identify problems with its anti-money laundering checks over a significant period, a disciplinary tribunal has ruled.

The company was fined £500,000 ($634,000) last month after failing to carry out proper dirty money checks during a four-year relationship with an unidentified shipping company that was buying tonnage for scrap. A former senior partner, Ed Mills-Webb, was fined £11,900.

Clyde & Co fine is a ‘wake-up call’ for law firms over dirty money

Read more

The London-based Solicitors Disciplinary Tribunal has now published its full judgment in the case, detailing the reasons it imposed its equal highest fine against a law firm in a misconduct case.

A three-day tribunal heard that Clyde failed to carry out full checks on the owner of the shipping business and shareholders, or scrutinise the structure of special-purpose vehicles set up in Liberia and Nevis.

Although it accepted that the problems arose out of carelessness, the tribunal said “money laundering checks were not a new or unusual set of requirements, and the firm was experienced enough to have been able to ensure full compliance”.

Clyde and Mills-Webb admitted failings before the hearing over their work with the shipping company from July 2014 to January 2019.

Mills-Webb had admitted carelessness but expressed concerns that the firm was preparing to throw him “under the bus” to deflect attention from its own failings.

“The firm had initially sought to blame Mr Mills-Webb for the entirety of the failings,” said the tribunal in its ruling. “Clearly, in light of his own admissions, some of that blame was justified.

“However, Clyde & Co had failed to reflect on its own role until a late stage and had not focused enough attention on its own weaknesses in procedures and policies until recently.”

The tribunal found that Clyde’s culpability was high and took into account a previous finding against the firm from 2017, when it was ordered to pay £50,000 after admitting separate accounting and anti-money laundering breaches.

Despite that outcome, it had not put “adequate and robust” measures in place at the time of the later problems, the tribunal said.

“The misconduct was aggravated by the fact it was repeated and included missed opportunities to correct earlier errors,” said the judgment of the three-person panel. “The firm had failed to ‘join the dots’ over a significant period of time.”

Clyde said it has now “significantly enhanced” its compliance processes, including setting up a head of financial crime.

Mills-Webb left the firm while suspended in 2019 and now works at Preston Turnbull, set up by a group of ex-Clyde lawyers.