The Solicitors Regulation Authority (SRA) of the United Kingdom is prosecuting Biglaw entity, Dentons. The litigation concerns procedural shortcomings related to client onboarding. Dentons was reportedly negligent in exercising due diligence while onboarding a client, referred to as ‘Client A’ in SRA’s documents. Client A, formerly a bank chairman, was sentenced to imprisonment for laundering billions in an embezzlement scheme. Above The Law reported on the news recently.
Client A’s relationship manager was Francois Chateau, a partner at Dentons. Francois Chateau and his client portfolio arrived at Dentons when the company merged with the smaller French law firm, Salans. Trouble surfaced when a member of Dentons’ risk and compliance staff showed concerns over Client A’s intentions to purchase a bank in the UK. Chateau responded to this in a memo by labeling the employee as untrustworthy and oblivious.
According to the SRA, Dentons’ method of due diligence related to Client A was not up to standards. Chateau’s approach was described as the exact opposite of what was required. Chateau was also accused of hostility towards anyone who suggested the need for elementary compliance checks by the regulatory body.
Dentons, on the other hand, refutes these claims, stating that their process was compliant with the prevailing regulatory norms. They contend that the SRA, as a responsible prosecuting entity, has chosen an unattractive position by ignoring the advice issued by the Law Society and approved by the Treasury. This advice regards the procedures for confirming Client A’s wealth source.
Despite Dentons’ defense, the fact remains that an employee who raised concerns over Client A was ignored internally. This incident is a pertinent civilian reminder of the importance of internal checks and balances, especially in large firms with reputations to protect.