You are a trainee solicitor with a medium-sized law firm, Moran, Talbot & Fox LLP, based in Leeds. Your mentor, Megan Talbot, who is also one of the partners, has just had a meeting with one of the firm's associates regarding some potential irregularities that have been identified in client files and the use of the firm's client account. In the light of the fact that you have a more up-to-date understanding of the SRA's professional requirements, she asks you to provide her with a confidential report highlighting the following points with regard to Henry:

• Anypossible statutory andprofessional regulatoryprovision(s) applicable to the situation
• ThepossibleclassificationofHenry's actions underbothstatutory and regulatoryprovisions
• Theprocessesand procedures that Henry may be subject to in relation to theclassification ofhisactions

Megan emphasises the fact that this is to be kept strictly confidential and that you must only communicate with her on this matter.

In the meeting, she notes-

The associate's name is Henry Lynch. He qualified four (4) years ago and has been with the firm since leaving law school. To date, there have been no complaints or concerns about his work. Since qualifying, Henry has built up a client portfolio which includes a long-standing client calledCarlosBegbie.

Carlos has an import/export business based in Leeds that has a distribution centre in the Republic of Colombia.There are rumours that Carlos is related to the Vice President of Colombia but he has not enquired too deeply for fear of losing Carlos as a client.

Recently, Henry has assisted Carlos in his proposed purchase of three (3) storage units next to the canal in Leeds. They are high-value purchases because of their prime location and Carlos is funding these purchases with assistance from his business partner Mr Khalli who lives in London. All three (3) purchases are cash buys and require no mortgage or external loans.

Four (4) months ago, Carlos introduced Henry to Mr Khalli at a meeting in London and referred to him as his business partner. Carlos mentioned that MrKhalli has recently expatriated from Colombia and is keen to expand his business interests in the UK. As such, he wishes to purchase the 'Atomic Casino' which is based in central London and asks whether Henry would be able to assist him with this.

Due to his recent move to the UK, Mr Khalli didn't present any documents or passports but promised to do so as soon as his cases arrived from the delivery company. In the meantime, Carlos "vouched for 100%" for his colleague and assured Henry that he was a "good guy".Carlos is a prized client and Henry didn't want to lose him. As such, he agrees to start work on Mr Khalli's case on the understanding that Mr Khalli will provide him with this documentation.

One (1) month later Henry permitsasingle agreeddeposit of 300,000 from amoney transferaccount to be made into the firm's client account concerning MrKhalli's purchase of AtomicCasino. A few weeks later Carlos called Henry to explain that MrKhallihas been experiencing problems with his bank account as a result of a mix-up with his documents during his immigration to the UK. Carlos asks Henry whether MrKhallicould use the firm's client account for a brief period of timein order to supportCarlos to completethepurchases of the three (3) storage units in Leeds.

Carlosisa very high-valueclientand,with the added prospect ofcontinuing high-earning transactions looming, Henry allows this to happen. Henry did not consider it necessary to discuss the matter with anyone else in the firm. During the next couple of days, theMoran, Talbot & Fox LLP clientaccount receives50 deposits ranging from 10,000 - 100,000for boththepersonal and business expensesof Carlos.

A routine client and file review byMoran, Talbot & Fox LLP revealsall of these financial transactions. No shortfallsin the client accountarediscovered.A client file named CarlosBegbycontains three (3) years of financial statements all from different banks. Present in the file is a photocopy of Carlos's wife's birth certificate and a copy of a marriage certificate in the name of CalvadosBegbie. Numerous other photocopies of business documents are presentanda photo membership card from an Englishgolf clubin the name of CarlosBegbie.Nothing else relating to Carlos Begby is held on file.

The client filemarked'MrKhalli' containsahandwrittennoteofa mobile telephone number and a money transfer reference number. There is a handwritten note from Henry as a reminder to chase Mr Khalli for a copy of his passport and other documents.

Following these discoveries, Moran, Talbot & Fox LLP opened an internal review. This meeting between Megan Talbot and Henry Lynch is the first meeting. Megan is concerned about what has been discovered and wants you to prepare the memorandum for her highlighting the points mentioned above.

Information from-

• The SRA Code of Conduct for Solicitors
• The Law Society's guidance with regards to PEPs
• The SRA's Money Laundering Case Studies
• The Law Society's Money Laundering Guidance

You can add-

• What information and documentation Henry Lynch should have requested from his clients
• Whether he breached any of his duties as a solicitor
• Whether he has breached any other statutory and professional regulatory provisions applicable to the situation such as the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
• The classification of his actions under statutory and regulatory provisions together with the potential penalties
• The processes and procedures that Henry may be subject to in relation to the classification of his actions

You may also wish to consider whether he should have spoken with the firm's COLP (Compliance Officer for Legal Practice) and COFA (Compliance Officer for Finance & Administration) at any stage.

Finally, whilst there is potential scope to discuss the SRA's Code of Conduct for Firms, and the potential liability of Moran, Talbot & Fox LLP in this scenario, your memorandum should focus solely on Henry Lynch.