Financial crime is on the rise and 2024 anticipates the microscope focused even more on the problems. Over 600 financial crime supervision cases were opened during 2022/23, up 65% from 2021/22. With law firms dealing with even more AML cases, it is crucial lawyers are aware of any subtle movements and shifts in AML practice.
The Financial Conduct Authority will be looking to crack down on all financial crimes including AML. With the regulatory landscaping evolving and technology playing a more prominent role, here are three AML movements to watch for in 2024.
Increased Intelligence Gathering
The Economic Crime and Corporate Transparency Act 2023 (ECCT Act) introduces alterations in reporting and information sharing.
The changes allow the National Crime Agency (NCA) to proactively information gathering, eliminating the need for a prior suspicious activity report. At this stage, it is unclear how effective this will be moving forwards but it at least gives the NCA opportunity to gain as much information as possible before proceeding with the next steps in future investigations.
This is likely to be a positive impact for law firms with the NCA able to gather more information productively and proactively, the more information gathered means lawyers can provide a better service for their clients and build strong cases.
Strengthened Companies House
A major step for Companies House as they gain more investigative powers and enforcement abilities. With the new legislations from the ECCT, Companies House can now cross-check data and information more effectively with both public and private sectors.
This means Companies House can now share information with the police or financial investigators where they find irregularities with the financial information provided as well as when they detect suspicious behaviour.
Technological Challenges
AML compliance will lean heavily on technology, particularly AI and blockchain. AI’s data processing capabilities and blockchain’s potential for customer identity verification are promising.
Innovations in technology are a major boost across the legal sector with major improvements in key areas like client onboarding, e-signatures, company checks, source of funds checks and address verifications. The purpose of innovative tech is to streamline a long drawn process lawyers go through and give them the tools to grow their firms, work effectively and efficiency and remain compliant with SRA regulation.
However, it’s crucial not to neglect investments in human resources and training amidst technological advancements.
Crucial the Legal Sector Stays Ahead of the Game
With subtle changes in AML operations, it is more important than ever the legal sector and law firms adapt. Understanding these changes when they arise is the first step and the planning will follow with strategies, expertise and technology likely to play a role in shaping the direction moving forwards as well as upholding compliance standards.
AML’s prominent position in the legal sector is likely to see trend movements. As noted above, it is vital to adapt to these changes.
Embracing these shifts will be instrumental in maintaining regulatory alignment and safeguarding clients’ interests in an evolving legal landscape.
