In March 2024, the Solicitors Disciplinary Tribunal (SDT) dismissed all allegations brought by the Solicitors Regulation Authority (SRA) against Dentons Solicitors. The hearing lasted for a total of 6-days. The SRA alleged that Denton’s had failed when acting for a politically exposed person (PEP) as they had not taken steps to identify his source of wealth. 

Back in 2005 when the United Kingdom was still a member of the European Union, the EU Parliament established laws over financing terrorism. This includes when a client is a Politically Exposed Person (PEP). A PEP is someone who has been appointed by a community institution, an international body or a state (including the UK) to a high-profile position within the last 12-months. As a result, they are deemed to be higher risk for potential involvement in bribery and corruption and therefore, additional checks are needed before they are taken on as a client. 

Denton’s stated that they took adequate measures in accordance with the Money Laundering Regulations 2007 (since replaced by the Money Laundering Regulations 2017) to establish the source of the client’s wealth and funds. Any rules they breached had been inadvertent.

The firm had relevant anti-money laundering policies in place and enforced those policies. Further, in 2014 the SRA had judged Denton’s to have ‘gold standard’ systems and control. As a result, the SRA encountered difficulties when trying to make a criticism of the firm after the event.

The SDT ruling consisted of nearly 90-pages. The SRA argued that its allegations were properly brought. Further, they tried to justify recovery of  some of the costs for the failed allegations from Denton’s on the basis that their costs were only incurred after Denton’s applied to rely on expert evidence.

The SDT found that the firm had breached the regulation requiring them to take steps to establish the client’s source of income. However, this did not amount to misconduct.

Dentons argued that the SRA had not taken into account the Law Society practice notes on Anti-Money Laundering. Further, Denton’s  submitted that the SRA had not followed their own guidance from the period in question when bringing the prosecution.

The STD agreed in full with all the representations that were made by Denton’s. Subsequently, the allegations were dropped. As well as dismissing their allegations, the SDT did not make an order for costs against Denton’s. As a result, the SRA had to shoulder their own costs of £189,000.

The SRA are appealing the decision and the appeal was lodged with the High Court on 9 July 2024. The grounds for appeal will probably be published near the end of July.