Utilising Tech Solutions To Strengthen Your Client Due Diligence Obligations
The Importance of Technology in complying with SRA requirements
Challenges faced by law firms
The Solicitors Regulation Authority (SRA) expects firms that are subject to the anti-money laundering regulations to carry out Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) checks where needed. They must make sure that identification and verification is done according to the requirements of the regulations, and a record is kept for at least five years.
The importance of technology in complying with SRA requirements
- Firms need to be able to demonstrate to the SRA that they have applied Anti-Money Laundering (AML) requirements appropriately.
- Know Your Client (KYC) and Customer Due Diligence (CDD) are essential elements of a firm’s compliance framework.
- KYC is the process of verifying a customer’s identity, financial profile and risk level.
- CDD, a vital element of this process, means collecting and evaluating new customers’ information and determining their risk for illegal financial transactions. Meeting AML requirements can only work with robust KYC and CDD procedures.
Law firms are increasingly turning to specialised software solutions tailored for AML and KYC compliance. Modern software solutions such as EID&V (Electronic ID & Verification) provide sophisticated tools to identify and verify clients, making it harder for fraudsters to infiltrate identity check systems. EID&V technologies leverage artificial intelligence, machine learning, and biometric authentication to streamline the identification and verification processes.
Manual processes are often more time- consuming and prone to errors, leaving firms vulnerable to fraud and regulatory scrutiny.
By automating routine tasks such as identity document checks, database screenings, risk assessments and reporting, these solutions enhance accuracy and reduce the burden on compliance teams.
What Should Firms Consider When Choosing AML/KYC Software?
There are many AML Compliance and EID&V systems available, but when sourcing a new software solution, there are several key factors firms should consider, including:
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Compliance Coverage
Ensure the software meets the firm’s regulatory requirements and is specifically tailored to the legal sector and AML. It should include provisions for conducting Enhanced Due Diligence (EDD) when necessary, and ideally, it should stay updated with regulatory changes automatically. Look for software that provides reporting capabilities that can enhance proof of compliance requirements.
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Identity and Document Verification
Find software that can analyse digital footprints to better understand who customers or businesses are. The system should also be able to verify the validity of submitted documents and prove document ownership.
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Integration Capabilities
Any new software should seamlessly integrate with existing software platforms, or an existing case management system being used by the firm. It is vital to ensure that any new software integration enhances efficiency and avoids duplication of data entry. Ideally, any new software should be able to facilitate real-time updates across all systems and reporting facilities.
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Advanced Security Features
Protecting sensitive client information is vital. Look for technology solutions that provide robust data encryption, secure data storage practices, and compliance with data protection regulations such as GDPR.
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Intuitive Interface
Ease of use is crucial for adoption across the firm. An AML or EID&V software should be intuitive, simplify complex processes, provide visibility to compliance managers, reduce the learning curve for staff, and ensure consistent compliance practices firm wide.
Sessions for Solicitors – Stay Informed
PIB Insurance Brokers hosts regular Sessions for Solicitors which are free to attend. These also provide an opportunity for firms to address their concerns regarding AML requirements and professional indemnity insurance obligations.
If you are interested in attending one of our academies, please send us a message. We will provide you with further information on how to attend our next academy