When a solicitor of more than three decades’ standing is fined for breaching money laundering regulations, it’s time for the legal profession to recognise that no one is immune from compliance failure.

The recent case of Jeremy Bennett, a former owner and solicitor at Sheffield-based 7 Legal and Finance Limited, has become a cautionary tale about the real-world consequences of neglecting robust anti-money laundering (AML) controls, even when there is no personal gain or deliberate wrongdoing involved.

What happened?

Between November 28 and December 6, 2022, Bennett’s firm received three deposits totaling £9.1 million from the beneficiaries of a trust. The funds were then transferred to two third parties, despite no written instruction to do so, no correlating ledger documenting the transactions and no client or matter risk assessment on file.

Bennett later admitted he had kept a “mental note” of the AML risk assessment because he knew the client. However, that approach failed to meet the legal and regulatory standards required under the Money Laundering Regulations and the SRA Accounts Rules.

The SRA found that Bennett had

• allowed the client account to be used as a banking facility
• failed to conduct and record Enhanced Customer Due Diligence (ECDD), despite multiple high-risk indicators
• caused and materially contributed to his firm’s AML failings

While there was no evidence of dishonesty, and the SRA acknowledged that this was a one-off incident with full cooperation, Bennett was fined £4,273 and ordered to pay £600 in costs. The fine was calibrated to reflect both the severity of the impact and his limited personal culpability.

Why this case matters

This case is significant because it highlights a growing enforcement trend: the SRA’s zero tolerance for “informal” AML compliance practices, even in the absence of intent or financial gain.

Three key themes stand out:

1. AML compliance is not optional or symbolic. It is a core regulatory obligation. Saying “I knew the client” is no defence against the need for documented, risk-based due diligence. Regulators are increasingly clear that a mental note does not meet the threshold for compliance.
2. Client accounts must never be used as a bank. The use of client accounts to receive and transfer large sums with no genuine underlying legal transaction exposes the profession to money laundering risks and undermines public confidence. As the SRA put it, such misuse can provide a “veneer of authenticity” to illegitimate funds.
3. High-risk work demands heightened vigilance. When dealing with complex structures, offshore entities, or unfamiliar jurisdictions (as in this case, involving Hong Kong, Dubai, Panama, and the British Virgin Islands), firms must apply EDD and ongoing monitoring. The absence of these checks can lead to reputational and regulatory damage.

What can law firms do?

1. Never provide banking facilities

Under the SRA accounts rules, client accounts are for legitimate client matters only. If the underlying legal service is unclear or minimal, refuse the transaction. A solicitor must be satisfied that there is a proper and justifiable reason for the money to pass through the client account.

2. Document everything

A key failure in this case was the absence of a written Client and Matter Risk Assessment (CMRA). Firms should have clear, dated records showing:

• The client’s identity and ownership structure
• Source of funds and source of wealth
• Nature and purpose of the transaction
• The risk rating and any enhanced measures applied

This documentation protects both the firm and individual fee earners in the event of regulatory scrutiny.

3. Recognise and respond to high-risk indicators

The SRA identified multiple red flags that went unchecked:

• Complex or cross-border trust structures
• Unfamiliar jurisdictions
• Requests for urgency or shortcuts
• Payments to third parties
• Large, unusual sums not aligned with the firm’s typical work

Firms must train all staff, especially partners and consultants, to spot these indicators and escalate them to the MLRO or compliance team before proceeding.

4. Maintain audit trails

Every transaction must be traceable, with clear correspondence, instructions, and reconciled client ledger entries. The absence of a correlating ledger in Bennett’s case was a fundamental failure of basic financial governance.

5. Focus on culture and accountability 

This case underscores that “knowing your client” is not the same as “documenting your knowledge.” AML compliance is not a bureaucratic box-ticking exercise. It’s about protecting the firm, the public, and the integrity of the legal system. Firms that foster a culture of rigorous, evidence-based compliance, where risk is actively assessed and documented, will be far less exposed to regulatory action.

The Bennett case may only involve a modest fine, but its implications are big. It is a stark reminder that AML compliance is about evidence, not instinct. For law firms, this is not just about avoiding regulatory penalties, it’s about preserving reputation, client trust and the profession’s integrity in an increasingly high-risk global environment.

Now more than ever, training your staff in AML needs to be more than a tick-box exercise. Companies and law firms can easily fall out of compliance or get caught up in dirty money without a robust AML framework. Our suite of AML courses will help you stay protected. Try it now.