KYC Verification for Law Firms
AML & KYC Compliance
for legal companies
With no exception, risks can occur in any field of professional activity, both regarding the inner processes arrangement, and external factors that may influence business performance and participants' security. Besides the financial, real estate, and e-commerce industries, considerable risks can arise in the legal area.
Thus, to guarantee the smooth and stable workflow of legal companies and their business continuity, it's crucial to formulate effective risk management measures and follow the defined regulations, i.e. KYC & AML policies.
Today, financial fraudsters and cybercriminals choose law firms to be their targets for illicit actions. They're trying to use confidential client data, and enter a company's network infrastructure, leading to huge consequences.
So, it's important to comply with AML & KYC law requirements to be able to regulate a company's law activity according to the set rules. If not adhering to these regulations, along with specific prerequisites, law companies are likely to face severe consequences:
to combat money laundering crimes
Speaking about red flags for legal companies, they are one of the critical points of money laundering solicitors should consider. They concentrate generally on due diligence which is all the necessary information about clients, their cash sources, and extra data like ID, place of residence, etc., to tailor SAR (Suspicious Activity Report) in case of strange financial operations.
Additionally, the customer checklist includes their status checking, meaning whether they're under sanctions or PEPs. Therefore, these strict and scrupulous checking refers closely to the KYC for legal industry measures to vouch for a complete examination of the client's base and prevent cases of money laundering.
Considering the FATF recommendations, lawyers are gatekeepers of KYC legal and AML policies due to the wide range of services they provide to customers. However, lawyers and solicitors are still vulnerable to resolving ML issues because they perform multiple tasks, including advising services, solving financial and fiscal problems, executing financial operations, completing property purchases, investment activity, and establishing trust among clients.
The US Treasury delegates CDD and AML checks for lawyers who are obliged to carry out thorough inspections of the majority of new clients. That means legal firms have to follow money laundering and terrorism financing regulations by undertaking risk assessment measures at the beginning of the cooperation with a new client.
Also, they should make extra checks in case the relationships continue for more than three years, and in case of profile changes. So, what anti-money laundering checks for solicitors are necessary to guarantee business integrity, clients' security, and confidentiality of financial data?
- Clients have to provide proof of identity and address.
- Providing bank statements that cover the data on sources of funds for at least six months.
- Asking about the reasons for selling the property and how long a client owned it.
- Client's screening against global PEP and sanctions lists.
By following these money laundering measures and due to well-trained legal staff, they'll be able to detect suspicious transactions and prevent high risks of terrorism financing and money laundering.
With KYCAID service, any legal company will follow a firm line in verifying the client's identity, and their funds' sources, and performing a suitable anti-money laundering policy. By applying particular AML regulations, such as KYC and CDD, legal firms will fight hackers and define risk indicators timely to mitigate any illicit activity, including, besides ML and TF, tax evasion, identity theft, corruption, and manipulation in the field.