The SRA’s Annual AML Assessment found that 70% of law firms believed they were fully compliant, when they were not. This is a statistic that should shock everyone.
A key challenge facing the industry is that many legal and conveyancing firms believe they have sufficient processes for AML/PEPs checks. However, if a firm’s onboarding process and compliance checks involve emailing passports; photocopying documents; not re-checking people throughout the entire duration of the relationship, they are almost certainly not compliant.
The recent crackdown by the SRA has found areas of concern with AML compliance amongst several law firms, particularly around risk assessment, policies, controls and procedures. In March 2024, the regulator issued a fine of £19,482 to a law firm for failing to have the right documents to prevent money laundering.
Fraudsters and Bad Actors are using advanced AI tools to create fake documents, from IDs and passports to bank statements and property deeds. We see thousands of these documents attempting to pass through our AML platform and these fake documents are becoming more and more sophisticated. As part of our own research, it took one of our colleagues less than an hour to locate a website on the dark web that offered high-quality fake documents that would fool most people.
In this AI battle, firms which are using manual processes and little or no technology at all, are really exposed. The risks to firms are enormous and will only grow. These include high fines and reputational damage, if they inadvertently facilitate a fraudulent transaction, or money laundering.
So what is the solution? To begin with firms need to stop accepting photocopies or pictures of documents by email. The next step is actually more AI. Our ID verification technology helps combat these documents by analysing them at a pixel level looking for evidence of image tampering and manipulation.
We also insist that documents are captured in real-time enabling us to detect it’s a printout or screen capture. But our technology only goes so far. While we can alert you of such suspicions unless you act upon them you are still putting your business at risk as one law firm recently found out when they were received a hefty AML fine for facilitating a vendor fraud.
To combat criminal activity, its crucial for lawyers and conveyancers to implement robust verification processes, including document verification, background checks, and AI-driven fraud detection systems that can flag suspicious patterns, or inconsistencies in documents and transactions.
For further information about their new managed compliance service, Credas+, please visit www.credas.com or call 02920 102555.
