A solicitor has been fined £4,000 after failing to conduct proper due diligence on a trust he had been instructed to create, with £9.1m of assets flowing through the firm’s client account and an alleged significant loss to two beneficiaries.
Jeremy Bennett was sanctioned by the Solicitors Regulation Authority (SRA) after he was alleged to have transferred £9.1m without instruction, raising concerns of theft, fraud and a breach of the SRA’s Accounts Rules. Bennett had also failed to conduct any proper due diligence on the source of the funds contributing to failures relating to the Money Laundering Regulations 2017.
Bennett was acting as a consultant at the Sheffield-based firm he had previously owned, 7 Legal and Finance Limited. He acknowledged the transaction was unusual and agreed the matter was ‘high risk’ and needed a higher level of scrutiny. In this case, the high risk factors included
- Use of corporate assets to fund private expenditure of individuals.
- Use of multiple and foreign accounts.
- Unexplained urgency, requests for short cuts or changes to the transaction particularly at last minute.
- Requests to make payments to third parties.
- Outside the firm’s area of expertise or normal business.
One of the beneficiaries was based in Hong Kong which is a high risk jurisdiction.
The subsequent SRA investigation found Bennett had failed to conduct enhanced due diligence, despite the presence of extensive red flags, and left the firm in a position where they were effectively used as a banking service, breaching SRA accounts rules. In November and December 2022, the firm’s client account received three deposits totalling £9.1m from the beneficiaries of the trust, Bennett then allowed the funds to be dispersed from the firm’s client account to two third parties on instruction.
The beneficiaries disputed they had any knowledge of the transfer and have been unable to access them since. Bennett also failed to maintain accurate records of receipts and payments on the matter.
Bennett was fined £4273 and told to pay costs of £600 with the decision reflective of the fact it was a one off incident, with no pattern of misconduct, and Bennett did not gain financially from the incident. He had no regulatory history of concern, cooperated with the investigation, and is no longer a practicing solicitor.
