Despite the fact that law firms are not financial institutions, lawyers can be used for money laundering. Criminals may seek legal assistance to make their illegal financial, corporate, or real estate transactions appear legitimate.
When a lawyer is used to deposit, transfer, or withdraw funds, they may unknowingly be involved in money laundering activities.
Lawyers have an increased ethical obligation not to support or facilitate illegal activities as criminals continue to use complex schemes and transactions to launder money.
Law firms should thoroughly understand their ethical obligations and train their staff to identify complex transactions that may pose a high risk.
If a law firm suspects a client – or potential client – of money laundering or terrorist financing, it should take appropriate action.
Similarly, when establishing business relationships for high-risk transactions, lawyers must properly identify clients to ensure they are dealing with who they claim to be.
They must also identify their clients when money laundering or terrorist financing is suspected, or when the sufficiency of the identifying information provided is questioned.
If the client is a corporation or other legal entity, the lawyer must not only identify the client, but also the beneficial owners.
A better way to protect your firm
KYC is an important procedure because it assists businesses in identifying customers with criminal intent, allowing them to protect themselves from illicit financial transactions. KYC is also critical in reducing the risks associated with crimes such as money laundering, bribery, and fraud.
It is preferable for law firms to use technology to simplify the entire legal KYC compliance process, including Customer Due Diligence and onboarding, in order to avoid wasting time and complications.
When to perform KYC and AML?
To ensure AML compliance, you must perform appropriate client due diligence when establishing a new relationship with a client and before any exchange of money.
When gathering KYC information, there are four primary objectives:
- Identify the customer
- Verify the client’s true identity
- Understand the customer’s activities
- Monitor the customer’s activities
Protecting client data and reducing risk are critical components of running a modern law firm. Moving from your current compliance process to a new, online system can be a daunting task, but it is simpler and less expensive than you think.
Legal firms must review their practices to ensure compliance with increasingly stringent regulations, allowing you to verify clients’ identities and ensure they understand the true nature and purpose of the business relationships they enter into.
Conducting these due diligence checks enables you to avoid exposing your firm to any potentially damaging circumstances.
How can FACEKI help?
We help you save time and can be assured that you’re being consistent and secure.
KYC makes it easy for you to achieve this with checks such as:
- Identity Checks
- Photo ID Verification
- Remote Client Onboarding
- AML/PEP Compliance Check
- Interpol Black List Check
FACEKI ensures that your clients meet regulatory standards with ease. Lowering costs, increasing efficiency, lowering risk, scalability, improving customer experience, freeing up capacity, and, most importantly, saving customers time during the process that used to take 30 minutes to 30 seconds with digital identity verification are some of the key benefits of automated legal KYC compliance.