Modern Law Magazine Issue 66

AML
AML
The Future Of AML
SmartSearch is a market-leading, award-winning cloud-based platform built on the
latest technology. It offers an unmatched single-source digital compliance solution
that not only ensures our clients meet their AML and compliance requirements, but
also that they are utilising their data and resources in the most efficient way.
How can legal firms use
technology to crack down
on money laundering?
There is no doubt that over the past
few years, the UK has strengthened
measures to crack down on financial
crime. However, a number of high-profile
anti-money laundering (AML) failures
- resulting in eye-watering fines from
the regulators - have demonstrated that
some firms are still struggling to roll out
an effective digital compliance strategy
against money laundering.
Historically, fines for law firms that breach
AML rules have never been anywhere
close to the sums HMRC, the FCA and the
Gambling Commission have fined banks,
estate agents and betting firms; and not
because law firms are better at meeting
their AML requirements – rather, a lack
of fining power by the regulator, the
Solicitors Regulation Authority (SRA)
Most common AML
breaches amongst law firms
The Solicitors Regulation Authority’s
latest AML report claims that most law
firms comply with AML regulations, but
in fact, of the 70% the report defined
as ‘taking their obligations seriously’,
less than one in five (18%) were ‘fully
compliant’ – the rest were found to be
“partially compliant”.
The SRA’s investigation found that the
most common compliance failures amongst
law firms were around initial customer
due diligence, money laundering risk
assessments, source of funds checks.
It also identified £149m of potentially
criminal funds being laundered through
UK law firms, related to a wide range of
activities, including conveyancing, tax
evasion, fraud, complex offshore company
structures used to hide beneficial owners
and the sale of property assets over or
under their true market value.
What can law firms do
to improve their AML
procedures?
The issues with non-compliance in the
industry are serious, as the consequences of
not meeting requirements are that financial
criminals are able to get away with illicit
activities, however, the vast majority of
these activities can be stopped by putting
proper compliance procedures in place.
According to SmartSearch’s report –
Electronic Verification Uncovered, almost
half of regulated firms have seen a rise in
criminals attempting to launder money
or commit financial crime through their
businesses in the last year, while more
than one in ten have been the victim of
money laundering or financial crime in the
past six months.
Despite the increased threats – and the
fact that documents are easy to forge
- nearly half of all firms questioned still
use hard documents like passports, IDs
and utility bills as part of their verification
process for new business customers.
Technology is the
future of AML
It has long been agreed that the most
reliable and robust way to run an AML
programme is via a digital platform. But,
like any solution that relies on technology,
it is important firms know they can trust
that the solutions they choose not only
ensure they are meeting their obligations
now, but in the future too.
As a result, many firms have not made that
switch, preferring to stick to the manual
methods they have always used. In fact,
according to SmartSearch’s report, 45%
of legal firms still verify new customers
manually, 37% run manual checks because
it is the way they have always done it,
and 35% mistakenly believe that manual
checks are the only way to truly guarantee
a person’s ID.
But the fact is, even old technology is
more reliable than a manual check, and
the level of technology available now
for compliance purposes is exceptional,
and if firms choose a provider that is
able to update their services both in line
with technological developments and
changing requirements, they will always
be safe in the knowledge that their
business is meeting its obligations.
As a pioneer in AML and compliance,
SmartSearch is continually improving
and enhancing its platform to ensure it
is always offering the most advanced
solution on the market.
Next generation platform
Driven by the latest technology and
customer feedback, SmartSearch has just
launched its enhanced, next generation
platform, offering a number of key
innovations which sets it apart from its
competitors to offer clients the ‘gold
standard’ in AML,KYC and compliance.
As well as a brand-new interface, the
solution also offers the following key
enhancements:
1. Improved configurability and
automation through RESTful APIs
While SmartSearch has been able to
integrate its platform with clients’ existing
systems for many years now, via the next
generation platform, all SmartSearch
services are now available through
RESTful APIs, meaning clients can be
integrated quickly and efficiently.
And, by having all compliance checks on
one platform, users can manage everything
from one place, taking all the pressure off
customer onboarding.The latest platform
update also enables Clients to be able
to screen custom risk profiles, clearly
identifying where further investigation
is needed, while configurable watchlist
screening streamlines the AML process,
offering a seamless onboarding experience
for genuine customers.
As well as offering the most configurable
solution ever, the enhanced platform
also offers the ability to create bespoke,
fully automated workflows that are able
to assign, notify and create applications
based on rules.
2. Triple bureau data
One of the key sources for any verification
platform is credit reference agency data
and there are three main credit refence
agencies in the world – Equifax, Experian
and TransUnion. Information reported
to each of the three credit bureaus can
be different, as can the creditors that
are reporting that data, which means
any compliance solution using only one
bureau – as most do - could be missing
out on important information that may
only appear on one of the three. As a
result of the launch of its next generation
platform, SmartSearch has become one
of the only UK provider’s to offer triplebureau
reliability.
The enhanced platform now takes
additional data from TransUnion,
creating a market-leading triple-bureau
compliance solution, and bringing the
platform’s match and pass rate up to 98%.
3. Source of Funds
Following the launch of the enhanced
platform, the next upgrade will be the
introduction of Source of Funds (SoF)
checks, a brand-new functionality
that uses open banking to access an
individual’s or company’s bank account
to ascertain vital financial information,
with minimal input required from the
client. As well providing SoF evidence,
this innovative new functionality is able
to provide clients with proof of funds,
source of wealth and source of income
information for all customers - individual
and corporate.
And, to make the process as seamless
as possible, the SoF capability has
been integrated into the enhanced
SmartSearch platform, meaning clients
can run these financial checks in
tandem with other AML and KYC/KYB
checks, or as a standalone.
We know that, for regulated businesses,
ensuring all compliance requirements
are met can be expensive and time
consuming, not to mention highpressured
due to the fact that regulations
are constantly changing to try and stay
one step ahead of the criminals.
All these improvements not only make life
easier for our clients through improved
efficiencies, but they also combine to
offer the most reliable and robust solution
we have ever produced.
Manual checks are not only cumbersome,
but relying on them is hugely risky for
firms, because hard documents can be
forged so easily.
SmartSearch’s market-leading, awardwinning
cloud-based platform is built
on the latest technology. It offers
an unmatched single-source digital
compliance solution that not only
ensures our clients meet their AML and
compliance requirements, but also that
they are utilising their data and resources
in the most efficient way.
Zowie Lees-Howell,
VP of Enterprise Sales, SmartSearch
“Even old technology is more reliable than a manual check.”
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