25 August 2023 – London Amid the evolving landscape of legal compliance, Verify 365 has conducted an in-depth survey involving responses from over 100 premier law firms across England and Australia. The findings highlight both the industry’s resilience and areas for improvement in regulatory adherence.
According to the data, while many firms demonstrate a commitment to upholding legal standards, there remain common challenges. Verify 365 have identified several areas of concern based on their work with firms over the last two years, centering on governance, control, risk management, and record-keeping.
A significant number of firms failed to evidence adequate ‘Know Your Client’ (KYC) protocols and due diligence.
There’s a recurring issue of risk assessments lacking a robust methodology, leaving some firms vulnerable to overlooked threats.
Many firms fail to periodically update their risk assessments and control mechanisms, neglecting to adapt to a rapidly changing threat environment.
– Some policies and procedures in place are either too vague or not in sync with a firm’s unique business model.
– As firms expand, there’s an observed lag in updating their control framework, potentially exposing them to new threats.
– Reliance on third-party providers for name screening has led to issues, especially if these solutions aren’t finely tuned to a firm’s specific requirements.
– There’s also a noted inability among some to justify the absence of certain alerts in their sanction screening, particularly concerning the UK’s Office of Financial Sanctions Implementation list.
Rudi Kesic, CEO of Verify 365, commented on the findings, stating, “While the legal sector’s dedication to upholding best practices is commendable, these challenges underscore the necessity for continuous introspection and adaptation. In an era defined by its rapid technological and societal changes, the legal fraternity must remain agile and informed.”
Rudi further added, “Our goal at Verify 365 is not just to highlight these concerns but to actively assist in addressing them. Collaboration, training, and leveraging advanced tech are part of the solution, but an industry-wide commitment to excellence and adaptability is paramount.”
Law firms across both countries are encouraged to harness the insights from this study to refine their practices. As Rudi aptly summarises, “Excellence in the legal sector isn’t just about winning cases, it’s about leading in compliance, ethics, and service.”
Implications for Firms in the Legal Sector: Navigating the Regulatory Terrain
Understanding the regulatory landscape is one thing, charting a proactive course through it is another. These findings carry significant implications for law firms, many of whom might wonder: What does this mean for your firm?
Detailed Determination During Initial Implementation
Firstly, during the initial setup phase, it is important to emphasise the importance of making a detailed strategy tailored to each firm’s business model and subsequent requirements. This is foundational. As Rudi observes, “There’s no one-size-fits-all solution. Each firm must introspectively map out its unique trajectory in the compliance domain.”
Consideration of Customer Nature
Central to this is understanding the nature of a firm’s clientele. Questions to ponder include:
– Are services primarily extended to individual clients or business entities?
– What regions do they cover in terms of client residence or their trading activity?
– Does the firm employ a client risk-rating mechanism, facilitating a selective approach to more in-depth due diligence?
Data Integrity and Consistency
A close second is the consistency and integrity of data presented for screening. Ensuring uniformity in data elements like country names, dates of birth, and prefixes is critical. This extends to processing multiple names associated with a single account.
Opting for Automated Checks
To further mitigate the risks associated with manual data input, it’s prudent to leverage automated checks against officially issued identification documents, rather than relying solely on user-inputted information. When executed correctly, this strategy substantially reduces the occurrence of false positives from name screening tools.
Harnessing Advanced Tools like Verify 365
Rudi also highlights the advantage of sophisticated risk and compliance software tools like Verify 365, stating, “In our digital age, harnessing technology is not a luxury—it’s a necessity.” With a suite of algorithmic configurations, such tools can substantially reduce money laundering fraud, optimising the onboarding process.
The Challenge of Money Laundering and ID Fraud
While money laundering might seem like a minor inconvenience, it can accrue substantial overheads in time, resources, and reputation. Having precise tech tools and procedures to minimise these occurrences is integral to maintaining streamlined operations.
An Ongoing Commitment to Evolution
However, even with the best software tools at their disposal, the commitment to regulatory adherence is ongoing. Firms must be willing to revisit and refine their processes continually. “Evolution is key,” Rudi comments. “In a dynamic legal environment, stagnation is a precursor to non-compliance.”
Recommendations for Firms
To navigate these challenges, Verify 365 offers the following recommendations:
– Engage in continuous training and upskilling to keep abreast of regulatory shifts.
– Foster a culture of compliance, from the boardroom to the courtroom.
– Invest in advanced technological solutions, ensuring that tools are well-calibrated to the firm’s unique needs.
A Call to Action
In conclusion, the legal industry’s journey towards regulatory excellence is multifaceted, requiring both introspection and adaptability. As Rudi Kesic aptly encapsulates, “It’s not about dodging regulatory bullets. It’s about forging a path where those bullets never need to be fired.”
Stay Informed with Verify 365
For those keen on keeping a pulse on these shifts and ensuring their firms remain at the forefront of regulatory compliance, Verify 365 remains a beacon. Dive deeper into our studies, methodologies, and consultative offerings by reaching out to our team.
About Verify 365
A trusted leader in regulatory analysis and AML compliance solutions, Verify 365 assists legal entities across the globe in navigating the intricate maze of laws and best practices. For a deeper dive into our studies or to schedule a consultation, visit our website.