Technology and AML Compliance

By Ian Marriott, Director, INDEX Midlands

Virtual working is now commonplace and is set to continue to some extent, on a permanent basis.  Where technology enables teams to work from home at a certain level, there have also been challenges and it has opened-up opportunities for cyber criminals to take advantage of altered processes.

According to the SRA: “Criminals are taking advantage of the disruption caused by Covid-19 and the economic downturn.  Firms are now more exposed than ever to the risk of being used for money laundering… Conveyancing is currently at further risk because the stamp duty land tax (SDLT) holiday aims to increase the number and value of property transactions.”

The disruption caused by working from home has certainly increased the challenges faced by the those responsible for compliance.  This is in part due to the lack technology and processes needed to support the remote environment from a compliance perspective.

To respond to the rapidly changing situation, new LSAG Draft AML Guidance has recently been published to support legal professionals in complying with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended).  It includes a new section on technology which addresses the need for firms to understand the technology they have, in order to use it effectively.

According to The Law Society: “A legal practice must now have clearly documented Policies, Controls and Procedures (PCPs) based on their practice-wide risk assessment which include:

  • Measures taken when new technology is adopted to protect against ML or TF risks.
  • Where practices use electronic identification and verification (EID&V) tools they should document the role of the tool, the data sources it uses, and in what circumstances (clients/matters) it is appropriate to use the solution.”

At Index, we adopt an agile approach, where technology becomes an enabler for those responsible for compliance and with changing working patterns, we aim to help our legal clients to implement solutions to solve common issues.  For example:  we work with best-in-class industry leaders in the technology space to provide tried, tested and trusted solutions to our clients.

One example is the integration of our Index Platform with Thirdfort’s app which is setting the new standard in legal security and client checking by verifying ID and automating AML in a matter of minutes.

The customer uploads a short video of themselves plus driver’s licence or other acceptable photo ID and the technology uses chip innovation to validate documents and facial recognition for ID verification.  Developments in open banking provide details of banking transactions and a PDF report lists all the suppliers such as Experian, so legal professionals can check the source of funds in relation to each individual client.  The documentation supplies a clear audit trail enabling solicitors to comply with AML regulations for new clients swiftly and remotely.

Olly Thornton-Berry director, Thirdfort confirms: “Although the move to digital has been accelerated in the past 12 months, around 80% of all legal client onboarding is still completed manually.  However, it costs just £30 to buy false bank statements online!  Therefore, using the most advanced digital practices through the Thirdfort app integrated with Index’ platform, now means the whole client onboarding process can become digitalised and completed in a few minutes rather than weeks.”

At Index, our goal is to bring the very latest solutions to our clients and importantly, supply the support and team behind the tech as this is what ultimately ensures it works.   Our locally based, experienced team understand the challenges faced by legal professionals and offer dedicated support to ensure technology integrations through our Index Platform are always as smooth as possible.

In addition to solutions such as the integration of Thirdfort’s app, we help legal professionals with their due diligence through providing risk management solutions such as Lawyer Checker which ensures client funds are sent to a legitimate bank account associated with the seller’s solicitors.  We also offer Lender Monitor, a pre-completion search which assesses whether each transaction was in line with the lender’s Part 2 policies prior to submission of the Certificate of Title.  In addition, we also provide training to support CPD requirements. These are just a few examples of how we help employ the right solution enabled by the right technology all brought together through our user-friendly platform and supported by our dedicated teams, to enable legal professionals to focus on providing a better service for their clients.

To find out more, call Index Midlands on 0121 293 1185 or email: