Are you keeping up with your CDD?

Published by GlobalX on Nov 15, 2019

It is more crucial than ever for law firms to have a firm grasp on their Know Your Customer and anti-money laundering obligations. Law firms, due to the nature of their work, have been identified as a particular area of interest for fraud and other criminal activity resulting in greater scrutiny.

Under recent regulation, the AML requirements, as set out by the SRA, for working with commercial clients can vary depending on whether they are an LLP, a PLC or a private company.

All require you to take some level of Customer Due Diligence to verify their identity and existence, legal ownership/structure and depending on the size of the business also the look into its directors, PSCs and UBOs.

Once you’ve completed your initial CDD, you’re also required to have controls in place to monitor for suspicious activity after your initial assessment. As stated on the Gov.uk ‘You must make sure that your business has adequate internal controls and monitoring systems’ and ‘introducing measures to make sure that the risk of money laundering is taken into account in the day-to-day running of your business.’

These controls and systems should include monitoring both internal and external factors such as:

  • A dramatic increase in the volume of activity outside of your initial risk assessment
  • Activity outside of their original stated area of work
  • Changes to the nature of the business or origin
  • New appointments which may include new directors on sanction lists
  • Significant changes in corporate structure or

Good practice for CDD monitoring includes scheduling regular reviews to check whether there been any changes to your original assessment, obtaining up-to-date records and documents and investigating any newly surfaced information. Keeping up with due diligence can be difficult, performing regular audits and updates can be burdensome and bigger you grow more challenging this becomes.

But what if there was an easier way that combined both your initial company AML checks with ongoing monitoring? .

Through our Company Monitoring service, we help ease the burden of conducting these ongoing checks on customers. Our service enables you to track any changes made in Companies House that could be alert you to suspicious activity.

You can tailor the alerts to only what you deem necessary such as new appointments, new charges or changes in the registered address. Once you setup your monitoring you then get email alerts as soon as any changes occur helping you identify potential issues earlier.

There’s a lot more to continuous CDD than just tracking changes to the corporate structure but implementing instant alerts can help demonstrate rigid that you have stringent controls and measures in place.