On Tuesday, 22nd October 2024, I had the pleasure of joining the latest IQ Legal Training webinar alongside the brilliant Ian Quayle, and together, we discussed the common AML and compliance challenges when it comes to corporate clients within the conveyancing sector.
AML and compliance are daily challenges for conveyancers, and it’s understandable, given the obligations they need to meet to ensure they’re functioning efficiently and practising within the regulatory guidelines. Conveyancers are often involved in overseeing transactions for both residential and commercial property matters and analysing financial data to confirm the true source of funds is an essential element of due diligence processes. Compliance and AML often also present complex challenges during transactions which only delays the process further.
Ian and I discussed a vast range of key topics including corporate conveyancing compliance, the best practices for onboarding corporate clients, identification challenges, AML challenges for directors and beneficial owners as well as solutions to these challenges so your firm can reach its full potential.
Best Practices for Client Onboarding – Corporate Conveyancing Compliance
The process of working with new clients means efficient practices need to be put in place. Conveyancing firms need to be adaptable to combat any potential challenges during the onboarding process as well as gather as much information as possible to validate the client’s identity. The client should be presenting identification documents such as passports and driving licenses for identity verification alongside address documents like letters from HMRC, utility bills and bank statements which validate your client’s residence, confirming they live where they say they do.
As well as trustworthy identity verification processes, firms need efficient workflows that meet regulatory standards and ensure their focus can be on the legal matters at hand instead of attempting to manually validate documents and other information. A conveyancers time is precious and crafting workflows that are seamless provides the opportunity to save time and even take on more clients if the firm has the capacity.
The biggest takeaway we disucssed I would suggest for client onboarding is to ensure the firm’s processes are efficient as well as compliant. Conveyancers should also be aware of their compliance obligations, with the authority figures taking significant action against firms and businesses failing to meet the standards set. Compliance is a hot topic within the legal sector as more and more firms have faced fines and sanctions for not meeting their obligations, while larger firms seem to be facing the brunt of the authorities.
AML and Identification Challenges
Naturally, the process of identifying clients and meeting AML requirements isn’t always straightforward and often presents challenges. Ian and I dissected the challenges and analysed how best to counter them.
The main challenge usually involves validating identities, financial data and other pieces of information during the onboarding process. Not having the right ID and address documents can prove problematic, further extending the onboarding process and can sometimes put firms at risk of not meeting AML and compliance obligations. Having the right processes in place is quite simply crucial to combating ID and identification challenges that almost every conveyancer experiences on an almost daily basis.
Confirming the true source of funds presents its own challenges as you need to analyse financial data within a property transaction to establish if the money involved has been obtained legitimately and legally. If there is anomalies within the financial data, that is a instant problem and this will likely signify some form of illicit financial activity.
The best way to combat these kinds of challenges surrounding AML and idenification is to implement legal technology that meets your firms needs and ensures you can fulfil your legal obligations.
Beneficial Owner Challenges
Continuing the discussion, we began to dissect the complexities of beneficial ownership. Beneficial ownership refers to the person who ultimately owns or controls an asset, such as a product or business; therefore, in the context of conveyancers, it means identifying and verifying an individual or several entities that own or could benefit from the property involved in the transaction, even if their names are not directly associated with it.
Validating the ultimate beneficial owner is crucial in the fight against money laundering, as criminals can hide their illicitly gained wealth by holding assets in complicated ownership structures. This complex structuring means it can be even more difficult to validate source of funds information which can cast doubts over the validity of the transaction taking place.
However, all isn’t lost in these scenarios, as completing comprehensive due diligence on all parties involved will help break down the ownership structure and also give conveyancers a clear picture of who they’re dealing with. Another important element is understanding different ownership structures commonly used in property transactions, as any unusual partnerships or agreements in place are likely to signify potential money laundering.
With beneficial ownership identification providing complicated challenges and money laundering methods evolving, it’s essential firms are aware of these ever-evolving changes and have effective methods in place to combat financial crime.
What’s Out There To Support Conveyancers?
We also managed to discuss solutions available to conveyancers and conveyancing firms to combat these corporate client AML challenges. We discussed the ground-breaking impact that Verify 365 has had on legal firms across the country with validating their client’s identity while ensuring they meet their AML and compliance obligations.
I went on to explain that our technology offers biometric ID checks, which validate a client’s identity in just a few minutes using liveness scanning, NFC technology and facial recognition. In addition to validating a client’s ID documents, lawyers can complete comprehensive source of funds checks. Our winning combination of Open Banking technology with advanced AI analytics and a source of funds questionnaire enables firms to analyse financial data and access digital bank statements to establish the true source of funds and beneficial owners within a transaction.
To finish off, we acknowledge that conveyancers face a range of challenges regarding AML and compliance with corporate clients within the conveyancing sector. However, there are options that firms should consider to help them overcome their AML compliance struggles.