The draft Money Laundering Regulations 2017 have only recently been published and are now out for consultation.
The draft regulations will mean major changes are afoot for law firms in the way that they onboard new customers. The new regulations will see more detailed processes must be enacted, coupled with stricter fines and sanctions for those that are found to be in noncompliance.
Wayne Johnson, Encompass co-founder and CEO, was interviewed by Raconteur on where opportunities lie for RegTech firms in the legal sector following the publication of the Money Laundering Regulations 2017.
In the interview, Johnson makes it clear that the new regulations have been designed to provide transparency to regulators and authorities as efforts to combat money laundering and Counter Terrorism Financing are ramped up. Law firms will need to be far more diligent in the manner that they onboard clients as a result of these regulations, with changes to PEPs, Ultimate Beneficial Owners, risk assessments and customer due diligence.
The know your client (KYC) processes will also come under enhanced scrutiny from the Solicitors Regulation Authority (SRA) as a result of a newly created supervisory authority, the Office for Professional Body Anti-Money Laundering Supervision. This will help to improve coordination between authorities and AML supervisors.
Johnson goes on to describe how the use of digitisation and automation could have a massive impact for the legal sector. He explains that currently, onboarding can be both time-consumptive and require manual labour. Through the use of digitisation and automation, law firms can free up employees to work on customer facing projects, and reduce human error while creating a digital audit trail that can be checked by internal employees or regulators.
Finishing the article, Johnson explains how one overlooked yet very important part of using automation for client onboarding is the ability to scale operations at cost:
“By enabling automation, technology can be a lever for differentiation of service and containing costs.”
Ultimately, however, MLR 2017 will also provide opportunities for law firms. By updating manual process for automation and digitisation, law firms can ensure they remain compliant while reducing cost.
Read the full story on Raconteur:
The 2017 Money Laundering Regulations (MLR 2017) have been drafted and were published just last week. Set to come into effect from June 27, the regulations around anti-money laundering (AML) and counter terrorism financing (CTF) will remain a focus for governments across Europe and globally for the foreseeable future.
Founded in 2011 by entrepreneurs Roger Carson and Wayne Johnson, and operating from the UK, encompass is the creator of unique, innovative Know Your Customer (KYC) software for banking, finance, legal and accountancy that enable better, faster commercial decisions. The company is driven by the belief that the best decisions are made when people understand the full picture.
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