Three ways to navigate AML compliance
Regulatory changes mean firms need to revise the ways they counter money laundering. Oliver Tromp, regional director at Actionstep, outlines three ways to achieve this
As money laundering tactics become more intricate, law firms must prioritise anti-money laundering (AML) compliance. Governments regularly update AML laws to counter potential loopholes, pushing firms to match evolving regulations across borders to avoid heavy penalties and reputation harm.
This column delves into the UK’s current AML regulations for law firms, outlines best practices for robust AML procedures, and highlights top AML tools for Actionstep customers.
What is money laundering?
Money laundering involves concealing illegally obtained money through placement, layering, and integration stages. Law firms, deeply involved in financial deals, are susceptible to being unwittingly involved in the complex layering stage, where criminals seek legal advice to obscure asset ownership.
What is anti-money laundering (AML)?
AML encompasses laws and procedures aimed at preventing illegal funds from appearing legitimate. For law firms, this means conducting thorough client background checks, maintaining detailed transaction records, and reporting suspicious activities.
AML regulations for UK law firms
The UK’s Money Laundering Regulations 2017 stress risk assessment and due diligence. Firms must verify client identities, understand their businesses, and monitor transactions. Additionally, the Office for Professional Body Anti-Money Laundering Supervision oversees AML supervision in legal and accountancy sectors.
Here are three ways to remain compliant:
1. Implementing strategies to avoid money laundering
To combat money laundering, law firms should develop tailored compliance programs, conduct regular risk assessments, implement customer due diligence protocols, train staff, leverage technology, maintain comprehensive records, report suspicious activities, regularly review and update compliance measures, and collaborate with experts. Leveraging technology effectively like a legal practice management platform with robust AML features and integrations helps automate the process of monitoring your transactions.
None of these processes alone will combat money laundering, however, used together they can be a powerful deterrent.
2. AML tools for UK law firms
Verify 365 provides comprehensive identity verification solutions. Its Actionstep integration offers law firms in the UK an efficient way to conduct client due diligence. Verify 365 automates identity checks and risk assessments, enhancing the accuracy and speed of AML compliance processes.
First AML simplifies the AML compliance process for law firms in the UK. It automates customer due diligence and reporting, reducing the administrative burden on legal professionals. First AML’s integration with Actionstep streamlines data management, ensuring a seamless AML compliance workflow.
3. Making AML an ongoing priority
AML must be an ongoing, constant priority. By combining these strategies and tools into their legal practice management, law firms can create a formidable defence against money laundering risks while staying compliant with evolving regulations.
Please note these regulations were correct at the time of writing (November 2023). If you’re reading this article at a far later date, we recommend conducting additional research to confirm the information below.
