In the intricate world of Anti-Money Laundering (AML) compliance, the stakes are high and the responsibilities vast.
Some law firms rely on central ‘onboarding’ teams to undertake the hefty task of client identification and verification. However, this must not be confused with the core risk assessment requirement, which is a job best suited to the front-line lawyer or file handler.
Today, AML compliance is not about ticking boxes; it is a comprehensive risk assessment journey that begins with a Firm-Wide Risk Assessment (FWRA) and cascades to the minutiae of client and matter levels.
A client’s risk must be assessed with each new matter because risk profiles are not static – they change as the legal landscape and client activities do. The assessment digs deep into the client’s background, reputation, and the legal nature of their matters, scrutinising every detail for potential AML red flags. This bifurcation in the risk assessment process ensures a thorough evaluation from a macro and micro perspective.
Recent insights from the Solicitors Regulation Authority (SRA) ring alarm bells, revealing a troubling truth: more than half of these risk assessments fall short of the robust standards set by Money Laundering Regulations. This statistic isn’t just a wakeup call – it’s a siren for immediate change. The SRA’s warning notice serves as a reminder that compliance is not just a formality but a critical shield against financial crime.
Why File Handlers?
Because they are the linchpin that connects knowledge of the client and legal expertise. It’s time for file handlers, with their in-depth understanding of specific client cases and legal nuances, to take the lead. They are positioned uniquely to evaluate risks pragmatically and with a level of detail that a centralised team might overlook.
File handlers’ frontline experience equips them to notice changes in client behaviour or transaction patterns that may indicate risk. By being intimately involved in daily client interactions and matter specifics, they can provide a nuanced risk assessment that is as dynamic as the legal issues they deal with.
In conclusion, the central ‘onboarding’ teams serve an essential function, but they cannot operate in a vacuum. A shared responsibility model, with file handlers at the forefront, supported by the central team’s resources, is the blueprint for robust AML compliance. Only by harnessing the unique insights of those who work closely with clients can law firms hope to meet the stringent demands of AML regulations and protect their practice from being a conduit for financial crime.
