How compliance professionals should choose an AML provider

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Conducting anti-money-laundering (AML) checks manually are a thing of the past. Technology enables compliance professionals to put far more robust procedures in place. Here’s how to choose the right one for your business. 

Law firms are legally obliged to complete robust anti-money laundering (AML) and know your customer (KYC) checks. Previously, these were done manually, creating unnecessary time burdens on companies, and carrying a greater risk of human error. But the ability to analyse a customer, transaction or series of transactions from multiple angles in real time, has pushed many to embrace technology solutions. Increasingly, it’s software that will sit at the heart of a firm’s AML compliance efforts. 

Lawyers are at the front lines of AML. For most activities where money is laundered, a lawyer will be involved at some part of the process. And as the incidences of money laundering increase – and the National Crime Agency currently estimates it costs the UK economy £100 billion every year – so too must AML software’s capabilities. 

Platforms need to be able to deal with vast amounts of often complex customer and transaction data. They should be able to consider inputs from third-party sources, such as government sanctions lists, and comply with evolving policies, such as HM Land Registry’s digital standard on AML and ID verification compliance, which it released in 2021. The Solicitors Regulation Authority (SRA) has invested in a dedicated team to oversee AML governance and indicated its willingness to fine those that get this wrong. 

So AML procedures are not just a tick-box exercise. They need to be watertight. The goal is to combine technology, training and effective procedures to make it harder to launder money. Innovative systems that can truly verify individuals using biometrics and connecting directly to their finances are offering lawyers levels of financial detail and compliance they’ve never had before. 

Here are a few areas to consider when evaluating which AML solution is right for you. 

Choosing features 

Not all AML programmes are created equal and there are various features on offer, some of which may not suit your organisation’s goals. Platforms such as Thirdfort include risk-based controls including customer due diligence, know your customer checks, enhanced due diligence (for high risk customers) transaction monitoring, sanctions lists, politically exposed person (PEP) screening and adverse media monitoring. Other important considerations are whether the solutions have matching algorithms that consider language differences and spelling variations, and proactive ongoing monitoring with alerts when a customer’s risk profile changes. 

Configurable algorithms 

One of the greatest time and efficiency drains with AML software is false positives and false negatives. These can be reduced by choosing a platform that is risk-based and profile-based, with configurable settings to the risk profiles of individual customers, transactions and sectors. Many will also have whitelisting capabilities, whereby approved customer names can be added to remediate false positive alerts more quickly.  

API integration

Organisations should look for an AML solution that will ensure seamless workflows and increase employee productivity, without too much upheaval for the team. Ideally you’ll want to be able to run checks through your existing processes or client relationship management (CRM) systems. The platform should have the capacity and speed requirements to handle your search volume, and necessary AML data should be available in an accurate and timely manner so that monitoring alerts can be addressed.

Ongoing support

The software should complement the skills and expertise of compliance employees who work with it every day. The best AML platforms will also offer support – for you and your clients. Chasing clients who fail to complete checks or answering queries from those who have issues can otherwise create a substantial demand on a legal firm’s time and resources without such assistance. They should also undertake an audit of your current systems and provide advice on improving them, plus organise training for your designated compliance officer and your wider team. Remember, the right AML solution should not only upgrade your AML abilities but improve efficiencies and solve current pain points. Aim for a solution that will improve performance and prepare you for the future. 

Software deployment

Will the software be deployed within a firm’s existing on-premise business infrastructure, or will it run in the cloud? Cloud software solutions allow firms to scale the programme up and down as required, and can reduce regulatory exposure by handling maintenance and security needs automatically. Updates should be provided in real time, rather than mass updates once a week. 

Security credentials

Law firms need a solution that will have solid data management capacities, be compliant with security legislation such as the GDPR, and robust against cyber threats. Look for ISO27001 certification, the globally recognised standard of information security management. Vendors should also have disaster recovery and business continuity strategies in place to ensure services aren’t disrupted by unforeseen circumstances.

AI and machine learning tools

Those solutions that use artificial intelligence instead of a strictly rules-based system to discern anomalies and unusual patterns will significantly enhance a firm’s AML performance by automating screening processes. New technologies can improve detection, lower false positive rates and simplify investigations to reduce labour costs. You also want features that streamline reporting capabilities. 

Cost 

Of course a firm’s budget shouldn’t be ignored. There may be some solutions that provide pay-as-you-go options, rather than monthly subscriptions, or discounts for those firms that pay an annual fee in advance. Ultimately, the right AML programme will help you reduce cost using automation, leveraging high quality real-time data, and protecting the firm from investigation and fine. But in choosing the right solution, firms should consider how they will evaluate its success and how quickly a return on investment will be realised. 

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Forward thinking legal firms are embracing change and their businesses are benefiting greatly. 

By bringing in simple, user-friendly solutions like Thirdfort for compliance management, these firms are successfully navigating the evolving regulatory landscape with the tech they now need to stay compliant and speed up client onboarding times.

If you’d like to learn more about how your firm can automate AML and ID verification using Thirdfort, book a demo with one of our team here

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