New anti-money laundering guidance published
The Legal Sector Affinity Group, made up of all the UK’s legal regulatory and representative bodies, has published updated anti-money laundering (AML) guidance.
The guidance, which is subject to approval by HM Treasury, included a new section on the use of technology as part of AML processes. This looked at areas such as electronic ID verification, corporate registry and beneficial ownership checkers and electronic tools to screen clients against sanctions, politically exposed persons and adverse media watchlists.
It considered newly emerging technology, including the use of biometric indicators such as facial recognition software as part of an overall identity verification process, suggesting it may be helpful in meeting a practice’s AML obligations, “especially in non-face-to-face situations and remote client take-on situations”.
The use of machine learning and artificial intelligence was also highlighted as potentially being helpful in some high-volume businesses, “particularly in reducing the number of false positive screening matches or discounting potential matches which have arisen”.
The guidance stipulated the importance of safe data storage and urged “careful consideration be given to the timeliness, quality and accuracy of data used within the system, in order to ensure the validity of output – along with the filters/settings used by the system deployed to identify potential matches”.
The guidance also included:
- Expanded guidance on understanding source of funds and source of wealth;
- An updated training section;
- Fully revised and expanded guidance on risk assessments – firm-wide, client and matter;
- A revised section on legal professional privilege;
- Revised, updated and expanded AML governance and internal controls sections;
- Clarifications on high-risk sectors, accepting cash into the client account, customer due diligence (CDD) on referrals from another legal practice, and timing of CDD/exceptions; and
- Discrepancy reporting to Companies House, and other relevant registries from new duty/obligations introduced from January 2020.
Read this article from CILEX Regulation to find out more