Dentons accused of breaking UK money-laundering rules by being not asking how he got his money
A top law firm is accused of breaking UK money-laundering rules by being too polite to ask a politically connected banker from a former Soviet republic how he got his cash.
Dentons overrode an internal warning urging “extreme caution” in dealing with him as a client and failed to ask the banker where his wealth came from in case it might be “impertinent or impolite,” legal regulators alleged at a London tribunal this week.
The banker, who can’t be identified due to a court order, had spent tens of millions of pounds on London property and a family member is now the subject of a separate police probe.
Dentons is fighting the case at the tribunal, arguing that it took “adequate measures” to establish the banker’s source of funds. Lawyers for the firm said it knew that the client held a “substantial shareholding” in a state-controlled bank.
The regulator’s lawsuit is one of just a small number of cases scrutinizing the role of professional services in enabling the flow of illicit finance into Britain. Few cases go to trial in the UK despite the police estimating that hundreds of billions of pounds are laundered through the UK annually.
The banker became a client of Dentons in 2013 after an acquisition of a smaller firm, and was immediately identified as a “politically exposed person” — a term used to ascribe a higher level of risk and one that puts the onus on the firm to scrutinize transactions. But Dentons never asked the banker for his salary or the the size of his shareholding in the bank.
Dentons lawyer Francois Chateau, now based in New York, told the Solicitors Regulation Authority in an interview that he never asked the banker how much he earned.
“In Europe, in my culture, we don’t do that. You don’t ask err, how much do you make?” according to Chateau. He said he’d never asked anybody to show him their bank account and to give evidence of what they own that would be “visible for everybody to see.”
The regulator called Chateau’s answers “astonishing,” saying that he adopted an “extraordinarily credulous attitude towards individuals of apparently spectacular wealth.”
Dentons said the regulator wasn’t targeting any individuals, saying it had accepted that “no one at the firm committed any rule breach, or at least none serious enough to warrant prosecution.”
It said Chateau knew the banker “was a wealthy man who was very successful in finance, that he was known for being opposed to corruption and that he was extremely well connected.” A spokesman declined to comment on Chateau.
Dentons persisted with keeping the banker as a client even after the firm’s general counsel said in 2014 that it shouldn’t continue working for him.
Dentons’ lawyers said even if the firm had breached money-laundering rules then its conduct wasn’t sufficiently serious to merit any kind of penalty. The firm said it has since improved its processes.
The regulator said any fine should serve as a meaningful deterrent to the profession.
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