By Legal Futures Associate Lawtech Software Group
Lawyers and compliance professionals have the challenging responsibility of safeguarding their law firms against money laundering and financial crimes. With the rise of complex financial and identity fraud, it is crucial for lawyers, COLP and MLRO to leverage technology to prevent and identify such criminal activities. AML providers play a crucial role in preventing, identifying, and verifying businesses and individuals worldwide through a process known as Know Your Business (KYB) and Know Your Client (KYC).
Choosing the right AML provider is essential, given the vast number of products available in the market.
Regulations governing professionals in the legal and property sectors require checks to take place. The law on Money Laundering mandates accurate verification of clients and their source of funds. Therefore, selecting the right AML provider becomes a crucial step towards compliance. This guide highlights what to look for when selecting an AML provider that aligns with your firm’s needs and budget.
Considering the factors mentioned below, you can make an informed decision that aligns with your firm’s needs and budget. Remember, AML compliance is not a one-time activity, and you need to ensure that your chosen software provider can support your compliance efforts in the long run. Here is a comprehensive breakdown of what you should consider when integrating legal technology into your firm.
Understand why AML & KYC processes are required
It is crucial to recognise that AML procedures go beyond just checking boxes. They must be robust and impenetrable to prevent money laundering effectively. The aim of a law firm should be to adopt a knowledge-based solution which has shaped the technology to make it more difficult for illicit financial activities to take place.
Recently, pioneering systems have emerged that can authenticate individuals through dynamic real-time facial biometric verification and connect directly to clients’ financial information, carrying out analysis and reports in seconds. This new wave of technology provides lawyers with a level of financial insight and regulatory compliance that was previously unattainable but also goes one step further when providing data and KYC insights.
The importance of regulatory compliance
An essential factor to consider is compliance. With this being a daily challenge for lawyers, solicitors and conveyancers, it is hugely important your AML provider can not only help you combat those challenges but also ensure regulatory compliance, whether that be with The Solicitors Regulation Authority (SRA), The Law Society of Scotland (LSS) or His Majesty’s Revenue and Customs (HMRC) in the context of estate agents.
Not all software providers have the core framework required to ensure compliance for your firm. For example, due to the inherent high level of risk in conveyancing, Her Majesty’s Land Registry, in conjunction with the Law Society and the Solicitors Regulation Authority, produced a set of guidelines for digital verifications in the form of a “Digital ID Standard.” The standard includes biometric and cryptographic elements in the verification process to ensure the legitimacy of the individual.
Conveyancers who follow the standard can gain “Safe Harbour” status, meaning that the Land Registry would not seek recourse against the conveyancer in the event their client was not who they claimed to be. Even where there is no conveyancing taking place, the level of accuracy and certainty that such a check can provide is invaluable to any law firm or professional.
This is a prime example of why choosing a provider with ‘compliance at its core’ is important and how it can help to reduce the risk of identity fraud and money laundering, which are major concerns for the legal industry. With the authority figures clamping down on regulation failings, it’s vital your AML provider can give you assurances that you’re fully compliant.
Efficient technology that suits your needs
When considering what client onboarding software to implement, you want any technology to work for you. This strive for efficiency is a key factor of client onboarding software. Ultimately, technology is there to make a positive impact and streamline your processes so you can focus on legal matters and core work.
Having slow and withdrawn onboarding processes will affect the growth of your firm but also not guarantee you are practising compliantly. Long and withdrawn processes can have a detrimental effect on the amount of time taken to onboard an individual and can make the whole identification and due diligence process much longer than it needs to be.
Consider the maintenance services that the provider offers. Is there a guarantee that the software will remain up to date with changing AML regulations and requirements? Are updates and fixes rolled out on time? These are all essential questions to ask when choosing an AML compliance software provider that offers the best possible support for your firm. Communication is key in this instance; unexpected system downtime can cause unnecessary problems and affect your ability to do your job. Analyse the market to find a system that ensures downtime is scheduled at more convenient times and that you’re communicating information like this.
In addition, Implementing a client onboarding platform that creates a seamless workflow will enable your firm to practice more efficiently. Not only does efficiency improve, but onboarding clients is much faster and makes the process much easier for you and your clients, eradicating the manual and paper trial in the process.
Adaptable and easy to use
Performing due diligence is a crucial yet challenging task. It’s vital to ensure that the AML compliance software platform you choose is user-friendly and streamlined for maximum efficiency. However, since no two law firms are the same, the solution you pick must be customisable to meet your firm’s unique needs while also taking your clients’ risks into account. Customisation options should include adding specific enhanced compliance checks or reports, automating compliance workflows, and integrating with other software, among other things, such as lite checks, adverse media checks and electronic address checks.
In addition to comprehensive identity verification, there are several other things to look for in an AML provider. For example, check whether the provider is using Open Banking to verify the source of funds and source of wealth. Also, ensure that the provider offers ongoing monitoring for global sanctions screening.
It’s crucial to choose an AML provider that is easy to use for your clients. Opting for an AML provider that provides both client ease-of-use and customisable options for your firm is the smartest choice. Simplicity is the key to success, keep things simple not just for your clients but for you and your team.
Essential data protection
Another important element when considering which AML provider to implement is data protection and security. With cybercrime and data hacking a significant concern, it is essential to protect both your firm’s and client’s data.
Don’t slack on data protection and security measures, given the enormous risk of neglecting something vitally important. Any data breaches can have serious repercussions, so ensure all your data is shared, sorted and stored in a protected and secure way. With criminal networks finding more elaborate ways to collect data, you must be alert and have the best software out there to enhance security measures.
Effective support network
When choosing an AML compliance software provider, it’s essential to prioritise the availability of customer support, training, and maintenance services. A provider that offers these services can help ensure that your team is effectively trained on the platform and that any technical issues are resolved in a timely manner.
To identify a provider that offers excellent customer support, start by checking their reputation in the industry. Look for reviews, testimonials, and case studies from other law firms or compliance professionals who have used their services. This will give you a good indication of their track record in providing quality customer support.
Additionally, you may want to assess the level of training and support that the provider offers. How do they roll out the system? Do they provide initial training on how to use the platform, and is ongoing training available for new features or updates? Do they offer a dedicated support team that can assist you with technical issues?
Without support in place, it can be hard for you and your team to make the most out of your investment, but it also means your clients will come to you for support when you may not have the answers.
Plenty to consider when choosing your AML provider
Your AML provider has to meet the needs of your firm to ensure you’re getting the best out of your investment but are also protected and can help your business expand and grow.
There are plenty of factors to consider, and ultimately, you need efficient, effective and compliant software that can elevate your processes and streamline your firm.
