A study of the legal profession’s understanding and use of anti-money laundering (AML) and know-your-customer (KYC) compliance controls to help meet new regulation suggest that law firms are feeling the same strain as banks and other financial insitutions.
The survey, reviewing 100 compliance officers at UK and European legal firms and their approach to preventing money laundering, is published by the risk and compliance solutions provider Accuity.
‘The Challenge of AML for Law Firms 2016’ reveals that among the main challenges are: identifying ultimate beneficial ownership (UBO), establishing clients’ source of wealth and asking fee earners to take responsibility for due diligence.
The report notes that over the past 10 years, the legal industry has faced increased regulation, from the implementation of the European Union’s (EU) third AML directive to the proposal of the fourth directive which is due to be implemented by member states in 2017. These policies, when coupled with major media scandals such as the Panama Papers, have made AML and KYC a priority for many legal organisations.
Nearly half (49%) of those questioned stated educating staff on how to report a compliance breach is extremely challenging. This raises the concern that “internal red flags” may be missed by those working with clients if they have not received adequate training to know how and when to report breaches, potentially leaving the firm vulnerable.
In addition to internal challenges, the onboarding process for clients and the compliance obligations involved can also pose potential difficulties. Fee earners can find it challenging to place enough focus on AML due diligence processes whilst being incentivised to attract new business at speed.
“We can see the legal profession is under a great deal of pressure from regulators to manage their due diligence obligations,” said Pat Hinchin, senior director, product management at Accuity. “This reflects the way the financial services sector has shifted in recent years as a consequence of increasing regulation and a series of high profile fines.
“It is surprising that only 8% of firms are currently screening their entire client base on an ongoing basis, given that sanctions lists are updated regularly and the risk profile of clients can change at any time. Firms are increasingly reliant on their compliance teams to ensure they always understand the risk of doing business with their clients.”
Amasis Saba of law firm Berwin Leighton Paisner commented: “As compliance manager and deputy money laundering reporting officer (MLRO), my priority is to ensure the firm takes a business enabling risk based approach and that the correct internal processes are in place to support it. We need to know exactly who our clients are, who is behind them and any risks associated, so that no threat is posed to the firm’s reputation.”
Scott Devine, AML policy advisor at the Law Society, observed: “Compliance with money laundering obligations is one of the greatest challenges for solicitors in the UK today and this survey report serves to highlight some of the reasons why that is the case.”
Far and away, the largest financial market on the planet is the foreign exchange currencies market, where on average individuals and organisations trade more than $5 trillion daily. In the FX world, the ability to master the market isn't considered a luxury for treasury officers–it's a necessity.
APIs may be a solution to MT940 challenges, says Karen Fagan, treasury operation manager, for British television company, ITV.
Apps are a critical part of treasury's shift into mobile banking as 67% of treasury and corporate finance professionals said mobile banking services are of particular interest to them in a recent survey.
Using data for predictive analytics is the future of banking success, argued Jean-Laurent Bonnafé, CEO of BNP Paribas, in his session on how the bank is reinventing its approach to innovate with and for corporates.