A recent review by the Council for Licensed Conveyancers (CLC) has revealed a significant compliance gap in anti-money laundering (AML) practices among licensed conveyancers. The CLC’s inspections over the past year showed that more than 40% of the inspected firms were not adhering to AML regulations. However, the CLC’s ‘assisted compliance’ approach has been effective in rectifying these issues, bringing nearly all non-compliant firms back into the fold.
Out of 52 firms inspected up to 5 April 2023, only five were fully compliant with AML rules, while 25 were generally compliant, and 22 were non-compliant. The primary areas of non-compliance included outdated AML policies, inadequate customer due diligence procedures, and insufficient practice-wide risk assessments (PWRAs).
Mev Dzihic, Director at Verify 365, emphasises the role of legal technology in ensuring AML compliance. “Client onboarding technology plays a pivotal role in maintaining compliance. Automated systems like Verify 365 not only streamline due diligence and risk assessment processes but also ensure that policies are up-to-date and effectively implemented,” said Dzihic. “It’s about transforming AML compliance from a regulatory burden to an efficient and integrated part of business operations.”
In response to these findings, the CLC has shifted its AML inspection approach from a triennial visit to a more risk-based assessment. This change has led to an increase in the number of firms classified as high-risk and a more targeted allocation of CLC resources to address emerging issues.
The Society of Licensed Conveyancers’ annual conference highlighted AML as the most sought-after topic for training and guidance. Jason Hinrichsen, CLC’s Director of Finance and Operations, stated that AML compliance, including matter-based risk assessments and checks on sources of funds and wealth, would be a focal point in 2024.
The CLC’s approach of ‘assisted compliance’ involves collaborative efforts with firms to rectify code breaches. Hinrichsen noted that this cooperative strategy has fostered a culture of self-reporting and successful resolution of breaches, thereby safeguarding consumer interests.
This review and the subsequent actions taken by the CLC underscore the increasing importance of stringent AML compliance in the legal sector, particularly among licensed conveyancers. With the aid of advanced technologies like Verify 365, firms can navigate these compliance requirements more efficiently, ensuring both regulatory adherence and consumer protection.
