Over the past two years, society has leapfrogged into a new digital age. Restrictions, lockdowns, and law practice closures have driven consumers toward online legal platforms and virtual law apps such as Lawyer 365, with demand for digital legal services at record highs. With the shift to online showing no signs of slowing, criminals are varying their techniques and looking for weak spots in the “New Law” system.
Today, law firms all over the globe are facing a momentous upsurge in fraud, money laundering and cyber threats, largely triggered by this vast move towards digital channels, remote working, and online legal services. Unsurprisingly, the shift to digital law has completely transformed the anti-money laundering and fraud risk landscape, generating a variety of new threats and challenges for law firms in all jurisdictions, which were already a top target for fraudsters pre-pandemic.
In June 2022, Verify 365 conducted a survey of law firm senior partners to assess the role of digital onboarding technologies as lawyers adapt to changing fraud methods while preparing for the new normal and responding to rising client demand for secure and seamless electronic ID verification processes. Verify 365 surveyed 100+ senior decision makers including managing partners, chief executives, heads of risk, heads of compliance and chief information officers, from the UK’s leading law firms, including SMQ Legal in Oxford, Starck Uberoi Solicitors in London, Law and Justice Solicitors in Birmingham and Riley Hayes Solicitors in Wolverhampton.
The survey found that law firms are a key target for criminals, with nearly 40 per cent of lawyers identifying they have been targeted by fraudsters. Conveyancing and property related transactions were also recognised as a top target by over a third of respondents.
Anti-fraud and compliance officers at law firms are responding to changing consumer habits and fraud methods by focussing on remote and digital anti-money laundering and fraud prevention channels. Digital client onboarding, which combines biometrics, liveness detection and NFC-chip technology, was top of the list when it came to onboarding technologies currently being used by law firms, with 30 per cent of those surveyed using digital onboarding platforms such as Verify 365 or Thirdfort.
Law firms are also reaping the benefits of additional layers of protection, with over a third implementing the full-cycle digital onboarding and ID verification platforms, such as Verify 365, which combine comprehensive ID document checks and person identification biometrics, client address verifications, global PEPs and sanction checks, backed with enhanced client due diligence source of funds checks that rely on the latest Open Banking FCA-regulated technologies.
Consumers are becoming less comfortable with traditional methods of proving their identity and source of funds, with nearly 90 per cent of respondents saying their clients were frustrated with the old and traditional methods of bringing a passport to their lawyer’s office for it to be scanned by a receptionist.
It is clear from this survey that law firms are missing out on the wide-ranging benefits of digital onboarding and verification technologies – with over 60 per cent of those surveyed saying they are not using any technology to streamline or improve client interactions.
While most lawyers understand the importance of legal technology, it seems that in general the legal sector is not yet aware of how technologies like Verify 365 can address and prevent risks associated with fraud and money laundering, with over 60 per cent suggesting technology hardly features in their client verification strategy.
Finally, the biggest barrier to the adoption of digital onboarding platforms was identified as a perception that it is expensive, closely followed by a lack of skills and knowledge around the onboarding technology.
However, if law firms knew the ins and outs of the lawtech and both its cost and time savings, they could easily get rid of these hurdles.
For more information, please visit: www.verify365.app
Author: Rudi Kesic