The Court of Appeal has ordered the SRA to pay 65% of Dentons’ legal costs - more than £500k - after a lengthy battle related to the firm’s failure to verify the source of a client’s funds.
The regulator originally appealed an SDT ruling in favour of Dentons, with the Court of Appeal eventually ruling that the case be partially re-heard before the SDT.
The SRA has been ordered to pay 65% of Dentons’ legal fees - more than £500,000 - in relation to a long-running, multi-court fight over anti-money laundering compliance failings by the firm.
In a costs judgment handed down on 21 May, the Court of Appeal said the regulator must pay the sum of approximately £515,000, with Dentons spending almost 4.5 times what the SRA spent on the case. The SRA was also ordered to pay £200,000 of the total sum within 21 days.
The Court stated that Dentons was “substantially the successful party in respect of the appeals from the decision of the SDT”.
It rejected the SRA’s argument that, as a regulator discharging its public interest responsibilities, it should not ordinarily be required to pay costs in appeal proceedings.
The dispute in question
The dispute began in 2024 when the SRA took Dentons to the SDT over allegations that the firm failed to properly establish a politically exposed client’s source of wealth between 2013 and 2017. The client was later convicted of embezzlement and sentenced to 15 years' imprisonment.
The SDT previously found that while Dentons had breached the Money Laundering Regulations, the breach was not serious enough to amount to misconduct.
The regulator took the matter to the High Court, which found the firm had breached its regulatory obligations, and ordered the case be reheard before the SDT, a decision that the Court of Appeal partially overturned.
There was a key difference though - the Court of Appeal disagreed with the SRA’s strict liability approach, clarifying that not every breach of the AML rules automatically constituted misconduct.
The Court ruled that breaches must reach a certain level of seriousness to amount to misconduct.
Dentons welcomes ruling
In a statement, the firm said: “Dentons has co-operated fully with the SRA throughout its investigation into events that took place between 9 and 13 years ago.
“The firm remains committed to the highest standards of professional conduct and regulatory compliance and continues to enhance its compliance systems and risk management procedures in line with evolving best practice.”
The SRA declined to comment when approached by Non-Billable.
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