SRA Seeks Unlimited Fines for Economic Crime Cases
The Solicitors Regulation Authority (SRA) has sought permission to activate its power to issue unlimited fines in cases involving economic crime. This move follows the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which came into force on March 4, 2024. The SRA argues that this authority will enable it to handle such cases more efficiently, bypassing the need to refer them to the Solicitors Disciplinary Tribunal (SDT).
Removing the Fine Cap
The ECCTA eliminates the existing £25,000 cap on financial penalties for solicitors, traditional law firms, and their employees involved in economic crimes. These offenses include theft, fraud, false accounting, bribery, tax evasion, money laundering, terrorist financing, and breaches of financial sanctions. The new rules apply to conduct that began on or after March 4, 2024.
The SRA highlighted three cases from the previous year involving breaches of anti-money laundering requirements. Referred to the SDT, these cases resulted in settlements ranging from £58,000 to £300,000, plus costs. The SRA asserts that without the fine cap, these matters could have been resolved more swiftly and without additional expenses.
Fining Guidance and Exceptions
Before implementing the new power, the SRA must revise its fining guidance and secure approval from the Legal Services Board (LSB). The SRA has requested an exemption from the standard approval process for significant rule changes, but it remains unclear if the LSB has agreed.
The updated guidance suggests that fines would generally not exceed 5% of a firm’s turnover. However, the SRA clarifies that this is not a rigid limit, and decision-makers may impose higher fines in exceptional circumstances. The new power also extends to individuals regulated by another legal regulator, such as barristers or chartered legal executives, when employed by SRA-regulated firms.
Impact and Consultation
The SRA has consulted with the Bar Standards Board and CILEx Regulation regarding parallel investigations. In 2024, the SRA proposed broader changes to its fining guidance, which faced strong opposition from the legal profession. As a result, the SRA focused on implementing the ECCTA changes, consulting with national and local law societies.
For alternative business structures and their employees, the SRA already holds the power to impose fines of up to £250 million and £50 million, respectively, under the Legal Services Act 2007. These entities remain unaffected by the ECCTA changes.
