AML software for law firms

• Transactional work: property, corporate and trust matters move or structure large sums on a client's instructions.
• Client accounts: money passing through a firm's client account can lend it an appearance of legitimacy.
• Corporate clients: ownership structures can hide the person who really gives the instructions.
• Politically exposed clients: PEPs and their families and associates need enhanced due diligence, not refusal.
• Sanctions exposure: acting for, or receiving funds from, a designated person can breach sanctions even where no AML duty applies to the matter.
• Matter by matter: risk changes with each new instruction, so due diligence is not a one-off at intake.

1. 1

   Assess the firm's risk

   A firm-wide risk assessment covering practice areas, clients, jurisdictions and delivery channels, kept up to date.

2. 2

   Identify the client and its owners

   Customer due diligence at matter opening, including the beneficial owners of corporate and trust clients.

3. 3

   Screen before acting

   Sanctions, PEP and adverse media screening of the client, its owners and, where relevant, the other parties before the firm accepts instructions.

4. 4

   Apply enhanced due diligence

   Source of funds and source of wealth checks, and partner approval, for PEPs and other higher-risk matters.

5. 5

   Monitor, record and report

   Re-screening during the relationship, keeping the evidence of every check, and reporting suspicious activity through the firm's nominated officer.

Under FATF Recommendation 22, lawyers, notaries and other independent legal professionals must apply customer due diligence, PEP measures and record keeping when they prepare for or carry out certain transactions for a client, such as buying and selling real estate, managing client money or assets, and creating or managing companies and trusts. Recommendation 23 extends suspicious transaction reporting to them, subject to legal professional privilege.

In the UK, independent legal professionals who take part in financial or real property transactions are within the Money Laundering Regulations 2017, and solicitors' firms are supervised for AML purposes by the Solicitors Regulation Authority. In the EU, notaries and other independent legal professionals are obliged entities under the EU anti-money laundering framework when they take part in such transactions. Sanctions apply to every matter, whether or not it is in scope for anti-money laundering rules. Public bodies, which are generally not obliged entities, also screen suppliers and counterparties against sanctions before contracting with or paying them.

• Quick checks at matter opening: screening that runs from the portal for a single client or by API from the practice management system.
• Ownership checks: a company lookup that reaches the beneficial owners and directors of a corporate client.
• PEP coverage that reaches family and associates, as far as the data allows.
• Adverse media in categories: so an allegation can be told apart from a conviction during review.
• Re-screening of existing clients when lists change, with alerts only on changes.
• A file you can show the supervisor: who screened whom, when and with what result.