The negative mindset towards know your client procedures (KYC) is something that runs across the industry and I have noticed an increased frustration in the last few years especially. I know many conveyancers have approached this part of the job with an attitude of “are we doing enough” or “have I done the minimum required” instead of “am I getting this right?” Yet, by having robust controls in place and a well-trained team, KYC significantly minimises the risk of regulation non-compliance.
I believe that the key to understanding risk in your firm is to understand KYC processes and always question whether you know enough about your client to keep these controls effective. Setting up a business six years ago, I have worked with the support of senior team to change this perception, encouraging all staff to view KYC as an essential part of the job and not a tickbox exercise.
Question everything
We encourage the team to be inquisitive, unafraid to ask extra questions. Their job is a like a detective in many ways, uncovering enough information to piece together the full picture and make a judgement if they instinctively know something might not be right. I expect them to know what their client does for a job, where they currently live, are they local? If not, why not? By gathering this level of detail, the team can identify any red flags from the very beginning – and understand whether a client poses a threat to the compliance of the firm. It’s also just a useful way to get to know a client personally, helping to deliver a better level of service.
Treatment strategies
Not all services pose the same risk to firms, but allocating the right case to the right fee earner is hugely important when it comes to reducing risk. To support staff at all levels, we consider the matter risk for each file, taking into account the individual requirements of the client. Technology can be helpful with this part of the process, we use software to analyse each residential conveyancing case and determine a complexity score. This score then allows us to allocate the file to the right conveyancer based on experience or qualification.
Knowing your client is the job
Conveyancers have a professional responsibility to know as much about their client as possible to reduce risk to their firm and remain legally compliant. KYC isn’t an inconvenient part of the job, it is the job. We have to stop viewing KYC and all related aspects including AML as a nuisance. The role of the conveyancer is to fully understand the client, using professional experience to assign the correct risk level.
At a time when there is so much talk around automation, the use of technology in legal practice and AI, demonstrating irreplicable human skill-sets is really important. While there is uncertainly around how much technology plays a role in conveyancing, KYC is an example of how applying human levels of due diligence is crucial because technology alone can’t do this job and signing off on risk can’t be outsourced. With illegal activity posing a constant risk and fraudsters becoming increasingly sophisticated in their practices, the role of the conveyancer is essential and cannot be replicated with technology.
The future of the profession lies with striking the right balance between conveyancer and technology. Between encouraging staff to understand that KYC is an essential part of the process which can be supported with the right software, red flags can be easily identified and criminal activity stamped out. Most importantly, conveyancers can embrace this part of the job rather than roll their eyes at it.
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