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A top law firm faced allegations that it broke UK money-laundering rules by being too polite to ask a politically connected banker from a former Soviet republic how he got his cash.<\/p>\n
Dentons overrode an internal warning urging \u201cextreme caution\u201d in dealing with him as a client and failed to ask the banker where his wealth came from in case it might be \u201cimpertinent or impolite,\u201d legal regulators had alleged at a London court. While the tribunal dismissed the case Monday, finding no breach of the industry watchdog\u2019s principles, it did find proof of shortcomings regarding money-laundering rules.\u00a0<\/p>\n
The banker, who can\u2019t 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 fought the case at the tribunal, arguing that it took \u201cadequate measures\u201d to establish the banker\u2019s source of funds. Lawyers for the firm said it knew that the client held a \u201csubstantial shareholding\u201d in a state-controlled bank.\u00a0<\/p>\n
\u201cWe recognize that risk management and regulatory compliance requires constant vigilance and attention and, since the period in question, we have significantly enhanced our capabilities and procedures,\u201d the firm said in a statement.<\/p>\n
The regulator\u2019s 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.<\/p>\n
The banker became a client of Dentons in 2013 after an acquisition of a smaller firm, and was immediately identified as a \u201cpolitically exposed person\u201d \u2014 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.<\/p>\n
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.\u00a0<\/p>\n
\u201cIn Europe, in my culture, we don\u2019t do that. You don\u2019t ask err, how much do you make?\u201d according to Chateau. He said he\u2019d never asked anybody to show him their bank account and to give evidence of what they own that would be \u201cvisible for everybody to see.\u201d<\/p>\n
The regulator called Chateau\u2019s answers \u201castonishing,\u201d saying that he adopted an \u201cextraordinarily credulous attitude towards individuals of apparently spectacular wealth.\u201d<\/p>\n
Dentons, which has offices throughout the world, said the regulator wasn\u2019t targeting any individuals, saying it had accepted that \u201cno one at the firm committed any rule breach, or at least none serious enough to warrant prosecution.\u201d\u00a0<\/p>\n
It said Chateau knew the banker \u201cwas 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.\u201d A spokesman declined to comment on Chateau.<\/p>\n
Dentons persisted with keeping the banker as a client even after the firm\u2019s general counsel said in 2014 that it shouldn\u2019t continue working for him.<\/p>\n
Dentons\u2019 lawyers said even if the firm had breached money-laundering rules then its conduct wasn\u2019t sufficiently serious to merit any kind of penalty.\u00a0<\/p>\n
The regulator will await a written judgment before deciding on any steps, a spokesman said.\u00a0<\/p>\n<\/div>\n