The European Union’s Fourth Anti-Money Laundering Directive was implemented into UK law on June 26th. As a result there are changes to how law firms must conduct customer due diligence and an increased focus on the need to incorporate ongoing and documented risk assessment.
What’s the risk?
There are regulatory and legal / criminal penalties in place for non-compliance. This includes fines of up to £1 million and prison sentences from two to seven years.
1. Customer due diligence and risk assessment
Under the new legislation the choice regarding level of due diligence is more limited. There is no longer any automatic exemption from enhanced due diligence. A decision to apply simplified due diligence needs to be evidenced by a documented risk assessment. In simple terms, this means that all conveyancing clients must be risk-assessed, regardless of country of origin, services purchased or delivery channels. Moreover, the risk assessment now needs to include Politically Exposed Persons (PEPs) and Financial Sanctions screening.
2. Ongoing record-keeping and transparency
Risk assessments must be kept and made available to regulators. This is worth noting as it is the first time that firms are explicitly being told to document and file risks in this way.
How an electronic AML search can help
An AML search facilitates risk assessment by combining all processes and records in one automated system. It enables firms to search for adverse information on a client more thoroughly than they would be able to do manually, and it ensures that compliance procedures are adopted firm-wide.
A typical AML search offers:
Geodesys offers an AML search at a cost of £6 (inc VAT) for enhanced due diligence. For more information please see our frequently-asked questions on AML for conveyancers at http://www.geodesys.com/aml-directive-faqs/