TG Baynes Penalized £64K for Six-Year Lapse in Anti-Money Laundering Controls

Persistent failure to comply with anti-money laundering (AML) regulations has cost a respected Kent-based law firm dearly, as the Solicitors Regulation Authority (SRA) slapped TG Baynes with a financial penalty of nearly £64,000.

The fine underscores a growing trend of strict regulatory enforcement across the UK legal sector, particularly as authorities push for greater transparency and control over the movement of illicit funds through law firms.

Over a six-year period ending in May 2024, TG Baynes failed to develop, implement, and maintain effective AML procedures in accordance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017). These regulations impose critical obligations on legal practices to detect and mitigate risks tied to money laundering and terrorist financing.

The SRA, tasked with overseeing compliance under Regulation 17 of the MLRs 2017, identified that TG Baynes lacked several foundational elements required for regulatory conformity. Chief among them was the absence of documented client and matter risk assessments (CMRAs)—a vital tool used to evaluate the financial crime risk posed by individual clients and transactions.

The MLRs 2017 mandate that firms must:

• Conduct firm-wide risk assessments tailored to the services offered.

• Maintain and regularly update documented policies, controls, and procedures.

• Complete CMRAs for relevant matters.

• Train all staff to recognize and respond to suspicious activities.

TG Baynes reportedly failed on several of these fronts, leading to a prolonged exposure to potential criminal misuse. Although the SRA acknowledged that there was no direct evidence of actual money laundering or financial harm, it emphasized that the lack of appropriate systems “significantly increased the risk of financial crime exposure.”

The final penalty for the firm totaled £63,869, with an additional £1,350 in costs. The SRA used its official methodology to determine the amount, factoring in the firm’s turnover, cooperation, remedial actions, and the need to deter similar conduct. As an alternative business structure (ABS), TG Baynes was subject to a higher fine threshold, under powers granted by the Legal Services Act 2007.

The penalty was based on 1.6% of TG Baynes’ domestic turnover. However, a 30% discount was applied due to the firm’s cooperation and steps taken to address the compliance gaps.

Importantly, fines collected by the SRA in relation to AML breaches are paid into HM Treasury, strengthening the government’s broader anti-financial crime strategy.

TG Baynes is not alone in drawing scrutiny from the SRA. Other firms have also faced financial penalties for similar compliance shortcomings:

• Gordons Partnership LLP, a London-based practice, was recently fined £77,784.

• Bannister Preston from Greater Manchester received a £22,831 penalty for failing to perform risk assessments on multiple conveyancing files.

• Seven additional firms were fined in the past month alone, with total sanctions exceeding £88,000.

The SRA has flagged recurring AML failings across the profession, including outdated or generic firm-wide risk assessments, lack of proper file reviews, and insufficient AML training.

Many firms have failed to align with guidance issued by both the SRA and the Legal Sector Affinity Group (LSAG).

In response, the SRA has increased its regulatory efforts with onsite inspections, file sampling, and interviews with compliance officers. The watchdog also issued multiple warning notices and sector risk assessments, offering firms a roadmap for regulatory compliance.

Moving forward, legal practices are expected to uphold several critical AML responsibilities:

• Carry out detailed, updated firm-wide risk assessments.

• Develop and implement tailored policies, controls, and procedures.

• Assess and document individual client and matter risks.

• Ensure staff receive regular training in AML obligations.

• Conduct ongoing internal reviews of AML systems.

Non-compliance doesn’t just attract fines; it can also trigger criminal liability under the Proceeds of Crime Act 2002 (POCA 2002), along with civil penalties and reputational fallout.

The cost of compliance failure goes beyond financial penalties, with potential damage to client relationships, eligibility for legal panels, and long-term business viability.

The enforcement against TG Baynes sends a clear message to the wider legal sector. As regulators sharpen their tools, including the introduction of unlimited fines under the Economic Crime and Corporate Transparency Act 2023, law firms must move from reactive to proactive AML strategies. The SRA is particularly focused on firms involved in high-risk sectors such as property and cross-border transactions, and is holding senior compliance roles—such as Money Laundering Reporting Officers (MLROs) and Compliance Officers for Legal Practice (COLPs)—accountable.

In the current regulatory climate, AML compliance is more than a regulatory checkbox. It is a foundational element of ethical legal practice, a safeguard for the financial system, and a critical factor in maintaining public trust. Firms are advised to treat AML compliance as a core operational priority, with continuous updates, investment in training, and leadership-level oversight. The TG Baynes case is a cautionary tale—and a wake-up call—for the legal sector at large. 

By fLEXI tEAM