Solicitors Regulation Authority Ltd v George Fahim Sa'id

Hearing dates: 23 April and 17 June 2024

Approved Judgment

This judgment was handed down remotely at 2:00pm on Tuesday 25 June 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

THE HON. Mrs Justice Thornton

Introduction

The Solicitors Regulation Authority (“the SRA”) appeals against the decision of the Solicitors Disciplinary Tribunal (“the Tribunal”) to dismiss four allegations of professional misconduct against the Respondent, a solicitor, in relation to the management of the risk of money laundering. The professional misconduct is said to have arisen from two property transactions for the purchase of a hotel in London, worth approximately £27 million and a house, also in London, worth approximately £8.5 million. The transactions were conducted by the Respondent's firm for a wealthy Iraqi family.

The SRA also appeals against the decision of the Tribunal to refuse to anonymise individuals, locations, companies and the country featuring in the case. This appeal is the subject of a separate judgment annexed to this judgment.

An SRA report on money laundering titled “Cleaning up Law Firms and the Risk of Money Laundering” (2014), explains that law firms are a key target for those wishing to launder money because a law firm provides legitimacy to the funds. Property transactions are said to be particularly attractive to money launderers as they can legitimise a large amount of money in one transaction.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (2017/692) (“the Money Laundering Regulations”) require a solicitor to conduct enhanced due diligence in relation to business relationships or client transactions which give rise to the risk of money laundering. Appropriate procedures must be in place to determine whether a client or beneficial owner is a “Politically Exposed Person” (“PEP”) or connected to a PEP, and the consequential risks must be managed.

The allegations against the Respondent

The four allegations of professional misconduct against the Respondent are as follows:

(1) Between around 1 November 2017 and 30 November 2018 and in relation to the purchase of a hotel in London, the Respondent failed to carry out adequate Enhanced Customer Due Diligence in respect of the transaction, contrary to regulation 33(1) of the Money Laundering Regulations. In doing so he:

• breached any or all of Principles 6, 7 and 8 of the SRA Principles 2011; and

• failed to achieve Outcome 7.5 of the SRA Code of Conduct 2011.

(2) Between around 1 November 2017 and 30 November 2018 and in relation to the purchase of a hotel in London, the Respondent failed to have appropriate risk management systems and procedures in place, to take adequate measures to establish the source of wealth and source of funds which were involved in the transaction and to conduct enhanced ongoing monitoring contrary to regulation 35 of the Money Laundering Regulations. In doing so he:

• breached any or all of Principles 6, 7 and 8 of the SRA Principles 2011; and

• failed to achieve Outcome 7.5 of the SRA Code of Conduct 2011.

(3) Between around 12 October 2017 and 1 November 2019 and in regard to the purchase of a house in London, the Respondent failed to carry out adequate Enhanced Customer Due Diligence in respect of the transaction, contrary to regulation 33(1) of the Money Laundering Regulations. In doing so he:

• breached any or all of Principles 6, 7 and 8 of the SRA Principles 2011; and

• failed to achieve Outcome 7.5 of the SRA Code of Conduct 2011.

(4) Between around 12 October 2017 and 1 November 2019 and in relation to the purchase of a house in London, he failed to have appropriate risk management systems and procedures in place, to take adequate measures to establish the source of wealth and source of funds which were involved in the transaction and to conduct enhanced ongoing monitoring contrary to regulation 35 of the Money Laundering Regulations. In doing so he:

• breached any or all of Principles 6, 7 and 8 of the SRA Principles 2011; and

• failed to achieve Outcome 7.5 of the SRA Code of Conduct 2011.

Background

The Tribunal did not set out its own summary of the relevant factual background in its decision. The background is not however in dispute and the following summary is taken from the skeleton arguments of the parties.

The Respondent practices as a solicitor. He is a sole practitioner, operating as George Anthony Andrews (“the Firm”).

For many years he has acted for a wealthy family, whose members include an individual who was, for a period of time, a Minister in the Iraqi Government (“the Minister”) and who was therefore classed as a “Politically Exposed Person” under the Money Laundering Regulations. Other relevant family members include the Minister's brother and his son. The family owns extensive land in Iraq, a country identified as a high risk country for the purposes of the money laundering regulatory framework.

In July 2017, the SRA conducted an assessment of the firm's money laundering systems. No deficiencies were identified.

The hotel transaction

The Respondent was instructed in relation to the purchase of a London hotel in October 2017. The hotel was owned by a company registered in Guernsey. The Respondent was instructed by the Minister's brother, on behalf of the Minister's son, to acquire the shares of the Guernsey company. Subsequent to the acquisition (in November 2019), the ownership of the hotel was restructured such that it was held by a newly incorporated English company. The Minister's brother became a director of the company. The Minister's son was its beneficial owner. A firm of tax advisors worked with the Respondent on the transaction. The purchase of the property was largely financed by the cousin of the Minister's son, who was based in Iraq, and partly from the sale of property in Iraq. The funds were transferred through a Dubai company owned by the Minister's brother.

The house transaction

In November 2017, the Respondent made an offer for the purchase of a London house on behalf of the Minister's brother and family. In February 2018, the Respondent was then instructed by the Minister's brother to act in relation to the purchase of the house which was to be funded from the proceeds of the sale of a large plot of land in Iraq, which was being bought by a business associate of the family. The Minister's son was to become the ultimate beneficial owner of the house, through holding the shares in the company which owned the property.

The way in which the transaction was structured subsequently changed. The business associate proposed that he would use funds from his UAE company to purchase the house, which would then be exchanged for the land being sold by the family in Iraq. At some stage during the transaction, he became the Respondent's client. During the period of time between the business associate purchasing the house and selling it on to the Minister's son, the house was to be held on trust and the Minister's brother was to be appointed as a director of the company which owned the property. After the purchase of the house had completed, the business associate of the family withdrew from his intended purchase of land in Iraq. A settlement was eventually reached between the family and the business associate with the latter retaining the house. The Respondent was not involved in the negotiation of that settlement.

The SRA investigation

In late 2020, the SRA commenced an investigation into the Respondent's firm.

In early 2021, the firm provided the SRA with a list of 14 transactions conducted for the family between 2011 – 2019. The monies received and paid out by the firm on behalf of the family during that period totalled approximately £95.8 million. Seven of the transactions took place during the period whilst the Minister was a member of the Iraqi Government. The seven transactions generated approximately 73% of the total money received and paid out by the firm on behalf of the family.

The SRA's investigation focussed in on two of the transactions; the purchase of the hotel and house in London. The hotel purchase was the highest value transaction of the seven transactions, accounting for 29% of the monies received and paid out. The house accounted for 10% of the total monies.

The Respondent was interviewed by the SRA in April 2021.

In June 2021, the SRA produced a detailed report by a forensic investigation officer identifying failings in the Respondent's due diligence.

In November 2022, the SRA decided to refer the matter to the Solicitor's Disciplinary Tribunal.

In April 2023, the SRA issued a statement setting out its case (a Rule 12 statement) which was based on the forensic investigation report.

On 30 May 2023, the Respondent provided a written response to the SRA's statement of case.

The hearing before the Tribunal took place over 3 days in August 2023. The SRA did not call evidence and relied on the forensic investigation report and submissions from Counsel. The Respondent and one of his clients gave evidence. At the end of the hearing, the Tribunal dismissed the allegations against the Respondent. Written reasons were subsequently provided, dated 17 October 2023.

The Tribunal's written...