AML Checks for Lawyers and Solicitors – Best Practice

Background of AML Checks for Lawyers

The AML landscape in the legal sector is changing and has recently become more prominent. The UK Treasury and the National Crime Agency clearly define the legal sector as high money laundering risk.

Because of the high risk of money laundering, lawyers and s… are required to conduct due diligence on clients. Anti-money laundering regulations mean that law firms must, among other things, conduct money laundering checks on new clients. This means that a risk assessment and, if necessary, additional checks must be carried out for each client at the beginning of the working relationship. But regular audits are also required beyond this.

The relevance of compliance is reinforced by the Northern Ireland News: The Law Society president said the Law Society has significantly expanded its AML checks. This is to ensure compliance. She said:

Robust AML policies and procedures should be at the heart of every firm’s operational practice. We will continue to identify new ways of communicating key AML themes to our members including using online and podcast media. “The Society is committed to working with firms to ensure that regulatory obligations are adhered to and that the risk of exploitation of firms for money laundering purposes is significantly reduced.

A risk-based approach enables the legal profession to meet its AML obligations. This blog provides a best practices guide for law firms regarding the immediate AML review of their clients, whether corporate or individual.

Compliance as a Competitive Advantage of AML Checks for Lawyers

The ability to conduct Customer Due Diligence (CDD) in an automated way, enables the lawyers sector to use compliance as a competitive advantage rather than just a cost centre. Law firms are keen to adopt new technology against ML or TF risks.

If you are a law firm and interested in buying technology we recommend you document the role of the tool, the data sources it uses, and in what circumstances (clients/matters). Based on that you will find the right tool for your organization.

The future of compliance in the legal industry and the legal service industry is client centric where compliance is an Innovation driver and not a cost-center. It saves what matters most: the reputation of your law firm. Therefore, we present the technological solution CheckAML within the AML checks for lawyers guidance.

Client Onboarding experience

The client onboarding experience is important for law firms as it is for financial institutions and other industries.

Compliance and AML regulation should not disturb the experience but performing a risk based approach is necessary to demonstrate that regulation is not just a word. The Compliance mind-set at the onboarding can be your competitive advantage in terms of how the process works and how you use tech to utilise it.

Data Driven Approach for Law Firms

Law firms need a data driven customer centric approach therefor the CDD, EDD and onboarding experience is crucial. Use data the right way.

Digital Transformation

Digital Transformation is key for law firms to reach the new clients and to cope with the tech savvy generations. As it is crucial to get the onboarding of a Client right, so is to apply AML and Compliance driven approaches right at the beginning as well as on an ongoing base.

Red Flags for Anti-Money Laundering Law Firms

• A client is overly obstructive, secretive, or unwilling to meet with you
• A client submits false or falsified documentation
• A business is involved that cannot be found on the Internet
• A client is involved in business that is not normal professional or business activity
• A client does not have adequate knowledge of the nature, subject matter, or purpose of the requested legal services
• A business frequently changes legal form and/or directors
• A client requests shortcuts or inexplicable speed in completing a transaction
• A client has no interest in the outcome of the engagement or the costs involved (e.g., fees, taxes)
• A client regularly sends money to low-tax countries or international trade or financial centers
• A client has suspicious transaction amounts, such as very high transactions or very many low transactions to few recipients
• The source of the funds is unusual, such as funds coming in from a foreign country or being sent to a foreign country even though there is no obvious connection between the country and the client

How to conduct AML Checks for Lawyers?

As a lawyer or solicitor, it is important to perform proper due diligence and KYC. This includes various activities, which we have compiled below.

PEP Screening

PEP (Politically exposed Person) is not in all jurisdictions defined in the same way. But in general, Politically exposed Persons (PEPs) are persons who hold or have held an important public function. This function may, for example, give them influence over the use of taxpayer funds or the awarding of contracts by state-owned enterprises. As such, they are considered by the Financial Action Task Force to be a category of individuals more vulnerable to bribery, corruption, and money laundering than most.

Sanction Screening

Within the sanction screening, you can check for targeted financial sanctions (TFS). Individual countries and multinational organizations (e.g., the EU and the United Nations) impose sanctions to pressure other countries or organizations to change their behavior. Sanctions can be directed against individuals, specific companies, or entire nations.

There are 2 main types of financial sanctions: Asset freezing and the prohibition to offer funds and services.

Risk Assessments

The aim of a client risk assessments is to identify and assess the money laundering (ML) and/or terror financial (TF) risks identified at individual client level.

Therefore, the Risk Based Approach is important to implement in your organization. As a core principle of AML compliance the so called risk-based approach (RBA) refers to adjusting the level and type of compliance work done (frequency, intensity and/or amount), to the risks present.

How does CheckAML help with AML Checks for Lawyers?

DX Compliance is an AML and Compliance firm helping our clients identify, prevent and report financial crime. DX Compliance help Banks, FinTech’s and Payments Providers to continually monitor their risk and detect the threat of money laundering to ensure compliance and reduce fines.

CheckAML is the most efficient and cost-effective way of carrying out money laundering checks. We offer the only instant AML solution with full PEP & sanctions screening, ongoing monitoring and customer risk assessment worldwide. This helps to ensure Client Due Diligence for legal practices.

Our data and coverage is global, real-time and reliable, all your checks are automatically saved, for audits and regulatory visits. So everything you need we’ve got you covered.

Start your journey today and use CheckAML to screen your clients against global databases on an ongoing basis. To setup your account it takes less than 5 minutes. To learn more we also recommend to speak to our regional Sales Team and ask for a Demo.