The FCA’s AML probe into Market Financial Solutions (MFS) following its £1.3 billion collapse has sent shockwaves through Mayfair. While the lender is the primary target, the legal profession may soon move into the “danger zone.”
Here is why some law firms should be concerned:
1. The “Enabler” Crackdown Regulators are increasingly targeting the “gatekeepers” including lawyers and accountants who facilitate complex transactions. If firms helped set up the web of Special Purpose Vehicles (SPVs) allegedly used to funnel funds, or failed to verify the “Source of Wealth” of connected parties, they face severe regulatory scrutiny.
2. Due Diligence Failures The scandal centres on “double pledging” (using one property to secure multiple loans). Law firms acting for lenders are responsible for “perfecting” security and checking the Land Registry. Any firm that missed existing charges or failed to register new ones may face massive professional negligence claims as well as an expedited SRA AML audit and subsequent fines for AML oversight.
The Bottom Line: The MFS probe isn’t just a bankruptcy case; it’s an AML forensic audit. Any law firm that sat on the MFS panel or represented the associated SPVs should expect their files to be pulled. In a £1.3 billion fraud, the “I was just following instructions” defense will not satisfy the SRA.