London, UK – Despite the sanctions imposed on law firms due to the war in Ukraine, the UK legal industry continues to thrive, according to recent statistics from the Office for National Statistics. The legal services sector generated a turnover of £4.05bn in March, representing a growth of 19% compared to February. This growth comes at a time when the services sector generated turnover of £243.4bn, an increase of 20%.
Julie Norris, legal services regulatory partner at Kingsley Napley LLP, said, “Law firms need to be nimble and continue to focus on staff well-being to attract and retain the best people in a highly competitive market.”
“We are pleased to see the growth in the UK legal sector, despite the challenges posed by recent sanctions. As a provider of cutting-edge technology for AML compliance, we are committed to supporting law firms in streamlining their due diligence processes and enhancing their security measures. We believe that technology will play an increasingly crucial role in the legal sector’s continued growth and success.” – Rudi Kesic, CEO of Verify 365.
In regulated industries, due diligence is a crucial aspect of mitigating the risk of money laundering and terrorist financing. Law firms are required to perform due diligence on their clients to determine the different levels of risk posed by each client.
Standard Due Diligence (SDD)
SDD is the lowest level of customer due diligence, and it is applied when the risk of money laundering or terrorist financing is considered very low. Customers that qualify for SDD include financial institutions, public authorities, and customers offering specific insurance policies, electronic money products, or pensions. SDD requires less intensive information gathering than other levels of due diligence, but it must still address the four components of due diligence outlined by the Financial Action Task Force (FATF).
Customer identification and verification
Beneficial owner identification and verification
Understanding the purpose and nature of the relationship
Ongoing monitoring PEPs and sanctions
Enhanced Due Diligence (EDD)
EDD is the highest level of CDD and is applied to high-risk clients. EDD involves a more rigorous and comprehensive examination of customer information, including additional identification, verification, and ongoing monitoring measures. Imposing sanctions on a country and all of its citizens such as Russia is a prime example of a situation where immediately EDD is required – if at all possible to work with those individuals and companies. However, other examples of where EDD is required is where it is a financial transaction such as a property purchase and where the source of funds are coming from international bank accounts.
Improving AML Policies for Law Firms
To improve their AML policies and identify the appropriate level of due diligence, law firms can conduct regular risk assessments, establish clear procedures for determining customer risk levels, and implement ongoing training and education programs for employees. They can also utilise technology and tools to streamline the due diligence process and improve the accuracy of client risk.
How is technology helping the legal sector identify sanctions and strengthen AML processes?
Advanced technology is becoming increasingly important in helping the legal sector identify sanctions and strengthen their Anti-Money Laundering (AML) processes. SMQ Legal is a prime example of a firm that has leveraged cutting-edge technology to streamline their due diligence processes and mitigate risks associated with their clients.
According to Suezanne King, Partner at SMQ Legal, “Using advanced technology such as artificial intelligence and machine learning has significantly improved our AML processes, enabling us to quickly and efficiently identify and mitigate the risks associated with our clients. With enhanced due diligence (EDD) services and ongoing monitoring, we can stay ahead of the curve and make informed decisions about who we can work with.”
SMQ Legal’s risk-based approach enables them to categorise clients according to their risk profile and determine the appropriate level of due diligence required. By leveraging advanced technology, such as automated tools for PEPs and sanctions screening, adverse media checks, and ongoing monitoring of client activities, SMQ Legal can streamline their due diligence process and improve the accuracy of client risk assessments.
Through the use of cutting-edge technology, law firms can identify high-risk clients and mitigate the risks associated with their transactions. With advanced screening technology and ongoing monitoring services, law firms can stay up to date with the latest information about their clients, enabling them to make informed decisions and maintain their reputation for upholding robust AML policies.
Verify 365 – Global Sanctions Screening Checks
Verify 365 offers a comprehensive suite of tools and services designed to help law firms identify and mitigate the risks associated with their clients, including Politically Exposed Persons (PEPs) and sanctioned individuals and businesses.
With Verify 365’s ongoing monitoring services, law firms can have peace of mind that they are always up-to-date with the latest information about their clients. The company’s advanced screening technology checks thousands of lists, flagging adverse media and other important information with all the above in context. This 24-hour daily monitoring enables law firms to stay ahead of the curve and make informed decisions about who they can work with.
PEPs and sanctioned individuals can pose a significant risk to law firms, and Verify 365’s PEPs and Sanctions screening services are designed to help mitigate those risks. By using cutting-edge technology to screen clients against government-issued PEP lists and sanctions lists, law firms can ensure that they are not inadvertently doing business with individuals or entities that may pose a threat.
Verify 365’s ongoing monitoring services provide law firms with a comprehensive view of their clients’ activities, allowing them to quickly identify any changes in their clients’ risk profiles and respond accordingly. This ongoing monitoring ensures that law firms are always up-to-date with the latest information about their clients, enabling them to make informed decisions about who they can work with.
“As the legal sector continues to face increasing regulatory pressure, it’s more important than ever for law firms to have access to the latest technology and tools to help them stay compliant. Verify 365’s suite of services, including its ongoing monitoring and PEPs and Sanctions screening services, provides law firms with the tools they need to identify and mitigate the risks associated with their clients. By leveraging advanced technology, law firms can streamline their due diligence processes and enhance their security measures, allowing them to focus on providing the highest level of service to their clients.” Said Azeem Rashid, Director at Verify 365.