The UK’s Solicitors Regulation Authority (SRA) is prosecuting Biglaw firm Dentons for its procedure — or lack thereof — in onboarding a client. The client — identified in SRA documents as Client A — was a bank chairman who was eventually jailed for laundering billions of dollars as part of an embezzlement scheme. According to the SRA, Dentons’ diligence in taking on Client A was lacking.
Client A’s relationship manager was partner Francois Chateau. Chateau and his client list came to the Biglaw firm when Dentons combined with the smaller French law firm Salans.
As reported by Roll on Friday, the Tribunal heard that Chateau lashed out at a firm employee in compliance who dared to question Client A’s financials:
When a member of Dentons’ risk and compliance team flagged concerns over Client A’s plans to buy a bank in the UK, Chateau slammed him in a memo as “untrustworthy” and a “big prick showing a poor judgement and not knowing what he is doing”.
And when SRA investigators quizzed Chateau in 2020, he explained to them that it was “not in European culture” to delve into a client’s finances and “impolite” to ask them about their salaries.
Given the legal problems that would come to plague Client A, that memo did not age well.
The regulatory body has said the firm’s method of due diligence was problematic:
The SRA said Chateau’s approach to due diligence was the “exact opposite” of what was required and that he “appears to have taken a strikingly hostile approach to anyone asking to carry out the most elementary compliance checks”.
The regulator also described Chateau as “someone lacking in subtlety [and] insight” who did not have “respect” for the views of others.
Dentons is defending their process as in compliance with the appropriate regulatory standards of the time:
“The SRA appears to have felt driven to argue that the guidance issued by the Law Society, and approved by the Treasury, is irrelevant to the question of whether the Firm complied with the obligation to take adequate measures to establish Client A’s source of wealth and funds”, Dentons stated in its pleadings.
“This is an unattractive position for the regulator to adopt as a body required to prosecute responsibly, fairly and in the public interest”, the firm said.
The fact still remains that, internally, the alarm well was rung on Client A but ignored. But I guess “big prick” is apparently pronounced “completely right” in French.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.
