Verify 365 recently conducted a survey in the legal sector which revealed that identity theft and money-laundering fraud doubled in 2021 compared to 2020. Why?
Verify 365 Law Report 2022
The global pandemic ignited a digital transformation wave. Businesses and consumers alike increased their online activity and digital channels became the primary vessel for communication and connection. As we increased our time online via remote work, shopping, or streaming, cybercriminals used that time to study our growing digital footprints – seeking new ways to exploit the potential loopholes for their fraudulent activities.
Despite the investment in anti-fraud tools and technology solutions, the legal sectors in the UK, Canada, Australia, the Middle East and the US saw a 50% increase on average in fraudulent activity in 2021 compared to 2020.
The uptick in fraudulent activity can be evidenced by velocity abuse – once a fraudster infiltrates a law firm, they will utilise that loophole to use the lawyers as many times as possible.
The research also showed that identity fraud represented 56% of attacks within the legal sector. The use of ID cards (34%) was the most common strategy used by attackers for illicit verifications, followed closely by the use of passports (29%).
What’s the impact of fraud on the legal sector?
The rise in fraudulent activity has validated the message that Verify 365 has proclaimed since its founding – the sector needs to adopt a gold standard in online identity verification and AML to establish widespread digital trust and mitigate attacks.
As these threats and risks have become increasingly real for those in the legal industry (especially with the rise of digital currencies), the need to heavily invest and expand access to client onboarding, digital payments and identity verification technology has intensified.
The legal sector in the UK is ripe for digital client exploration, making it an ideal target for fraudsters to aim at.
I believe that establishing stronger digital trust at the very beginning of the client journey will be paramount to its overall success.
How can lawyers improve their eIDV and AML strategies in 2022?
As I pointed out earlier, money laundering fraud reached new heights in 2021, and close to two-thirds of that fraudulent activity was the result of attackers using illegally obtained ID cards or passports.
At the same time, the overall success of the client onboarding process hinges on the availability of verifiable credentials and the ability of anti-money laundering (AML) and identity theft protection providers to plug these major fraud gaps. “Knowing Your Customer” (KYC) ensures that identity theft and money laundering are minimised, giving more control over how client onboarding is managed.
In 2022, the key to avoiding increased fraud and the Solicitors Regulation Authority fines will be to invest in third-party AML and identity verification solutions like Verify 365. These solutions will bridge the gaps in the problematic network of global legislation that this industry battles daily and ensure preparedness for future enforcements that will inevitably tighten client identity requirements.
Law firms need a clear picture of who their clients are – biometrics, address, other identifying characteristics – and early investment in these solutions will ensure lawyers are meeting current and future KYC and AML legislation requirements as the sector hits exponential growth in the new digital world.
However, just ticking the boxes to meet the required KYC and AML legislation requirements is not enough to prevent fraud. For law firms to tackle fraud issues, they need sophisticated fraud detection capabilities – and this is where Verify 365’s eIDV solution which includes background video recording, device, and networking fingerprinting, behavioural analysis, and other checks shines at its best.
What advice would you give law firms for onboarding new clients?
To meet the growing demand for a seamless digital client onboarding experience, law firms need to identify a fast and scalable identity provider that can ensure trust among their clients and keep their operations in motion. This will enable them to ultimately provide their clients with a frictionless and trustworthy digital onboarding experience.
Investment in new client onboarding technology platforms, such as Verify 365, which includes biometric NFC-based identity verification, global address verification, open banking digital statements, as well as global PEPs and Sanctions checks, can help make the space more transparent and secure for all.
This editorial was first published in the Verify 365 Law Report 2022 which showcases the innovation and development of the best practices and platforms used by law firms in their fraud prevention activities, to improve the digital onboarding process of their clients while fighting against financial crime.
This article was first published in the Verify 365 Law Report 2022 which showcases the innovation and development of the best practices and platforms used by law firms in their fraud prevention activities, to improve the digital onboarding process of their clients while fighting against financial crime.
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