Law firms challenged on “cumbersome” AML processes

Cumbersome anti-money laundering (AML) processes are undermining the credibility of some law firms by leaving them exposed to criminals, potential fines and reputational damage, Europe’s largest legal conference has heard.

In a speech to the London Law Expo, SmartSearch chief operating officer Collette Allen has called on legal firms to catch up with the digital tools which would help to prevent financial crime and stop more lives being ruined by monetary scams. Ms Allen told the conference:

“It is no longer acceptable to persist with legacy, cumbersome, manual processes when they leave you open to sophisticated criminals and potential regulatory fines.

Given the global shift towards digitisation, the time has come for many legal firms to reflect on their compliance procedures.”

Ms Allen also said that legacy, manual AML processes unnecessarily lengthened and complicated firms’ transactions with clients and led to increased customer drop-out rates.

However, as well as challenging the sector, Ms Allen was sympathetic to the pressures that AML regulations were bringing to bear on individual law firms. Keeping pace with the ever-changing rules, she said, had meant onerous compliance challenges, and she added these had been magnified by the pandemic.

Ms Allen demonstrated the levels of sophistication and detail that electronic verification had brought to the AML process by providing tools like instant individual and company checks without documentation, allowing ongoing sanction and PEP checks and making due diligence and KYC procedures more robust and efficient.

She also gave advice to firms on the challenges of choosing the right digital solution – ensuring that it used transparent and high-quality data sources, integrated with existing systems, and was not resource-heavy.

This comes as SmartSearch signed up its 1,000th property client in May. Martin Cheek, managing director at SmartSearch, said:

“In addition to the importance of being fully compliant with regard to AML, there is now the added pressure of checking for sanctioned companies and individuals following Russia’s invasion of Ukraine.”

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