The AML UK Assistant allows law firms to rapidly collate all information necessary to assess the potential risks of a business relationship with a prospective or existing client, pursuant to UK law.
This is often a costly and time-consuming process for law firms as practice groups must navigate through lengthy internal processes and policies, losing valuable time and revenue.
Using the tool, users can quickly evaluate both new and existing clients through the entire client due diligence (CDD) process including:
(a) determining whether Simplified Due Diligence (SDD) or Enhanced Due Diligence (EDD) is required;
(b) identity verification; and
(c) issuing an automated written report and escalating any red flags.
All verification efforts are documented in a full audit trail. If desired, a report and dashboard are generated to monitor key factors such as risk type, transaction value or geographic location.
Background
In the UK, law firms are required to carry out client due diligence checks (CDD) when establishing a business relationship or entering into a high-value occasional transaction with a client in order to comply with The Money Laundering Regulations 2017 (MLR 2017). The Law Society of England and Wales has in turn specified what this legislation means for law firms in detailed guidance – which outlines the Client Due Diligence (CDD) process and checks law firms are expected to carry out on their clients and transactions to comply with this legislation.
Law Firms’ Responsibilities under MLR 17
Within the CDD process, law firms need to clearly document their risk assessment efforts, including the identification of the control structure and ownership of legal entities, verification of natural persons related to the ultimate beneficial owners, as well as source of wealth and funds in a transaction. In addition, law firms must also monitor clients continuously, establish procedures to report discrepancies in ownership information, and re-apply CDD measures when needed, all in a timely manner.
What are the penalties for failing to comply with MLR17?
When issuing penalties for non-compliance, the HM Revenue and Customs considers law firms’ actions in preventing and assessing potential breaches early on, pronouncing fines that are proportionate to failures.
Given the breadth of law firms’ responsibilities under these regulations, there is plenty of room for non-compliance. In 2020 alone, the HMRC fined dozens of entities for faulty risk assessment procedures, lack of adequate policies, and poor due diligence—with penalties ranging from £ 4,000 pounds to well over £ 4 million.
The biggest obstacle is the error-prone manual risk assessment, which is not only time-consuming, but can prevent law firms from acting timely, thus reducing its responsibility in AML breaches, and gaining a favorable stance before the regulatory bodies.
With the AML UK Assistant, this process is automated. Our tool assesses prospective clients and the proposed transaction against various data sources such as sanctions lists. The user is guided through an interactive anti-money-laundering questionnaire, based on which the information necessary for performing all key CDD functions is gathered. If specific scenarios require it, the corporate legal department can be automatically notified, and an approval workflow can be triggered.
Benefits
Automated & Standardized
The AML UK Assistant allows law firms to fully automate the entire CDD process from start to finish – ensuring consistency across the entire law firm. The application can also be connected to external databases such as sanctions lists, identity verification services and risk indexes.
Faster execution
Save significant time in the CDD process, completing background checks and establishing new relationships with customers faster. Through an automated and simple interface, a CDD Tool can perform multiple tasks across multiple clients, saving a significant number of hours for each user.
Integrated
The AML UK Assistant can easily be integrated into a law firm’s existing IT infrastructure and can include internal approval and handover processes.
Centralized audit trail
Save significant time in the CDD process, completing background checks and establishing new relationships with customers faster. Through an automated and simple interface, a CDD Tool can perform multiple tasks across multiple clients, saving a significant number of hours for each user.
Highly Customizable
Every application built on BRYTER is customizable. The AML UK Assistant may reflect a law firm’s unique policies, processes and risk treatments. The BRYTER platform gives unparalleled opportunities for customization.
How it works
Collect data
Through a customizable, user-friendly and interactive questionnaire, all relevant information about the prospective client and the matter is collected and processed. The tool is then able to assess a client’s background, verify their identity and establish the risk of the matter. The application can also be connected to external databases to include specific searches and checks.
Analyze customers
A risk profile is generated from the initial assessment, flagging certain activities or persons for their respective risks and then either providing recommendations for mitigation or built into escalation processes such as internal approvals and handovers.
Understand trends
A dashboard allows the law firm or the company to monitor and document all CDD checks and create meaningful dashboards based on this data. This helps to hold end users accountable and offers metrics on overall risk reduction.