The Ultimate Guide to KYB Compliance for Law Firms

Introduction

Regulations, like time, never stand still. This truism is most apparent when looking at the increasingly complex regulatory landscape for anti-money laundering (AML) and counter-terrorist financing (CTF). In the past year alone, we’ve witnessed significant regulatory shifts in the UK, coupled with damning reports from the Solicitors Regulation Authority (SRA) about the state of legal compliance, due diligence, and risk management in law firms across England & Wales.
And, the growing pace and breadth of supervision is unlikely to change. On 30th June 2023, HM Treasury introduced a consultation on reforms to AML and CTF supervision. This initiative, part of the broader Economic Crime Plan 2023-26, signals a transformative approach towards strengthening and streamlining the UK’s AML/CTF supervisory system against a backdrop of an evolving financial landscape grappling with the exponential rise of digital transactions and emergence of crypto assets.
The Economic Crime and Corporate Transparency Act became law, giving the SRA the power to issue unlimited fines for economic crime offences alongside more powers to the Registrar of Companies House to become more active in preventing the creation of, and shutting down, fraudulent companies.

It is clear that firms will continue to be challenged by the fallout from modern geopolitics, fierce regulatory headwinds, the digitisation of business, and an increasingly impatient regulator, particularly when conducting ‘Know Your Business’ (KYB) checks. No longer just a regulatory formality; but a highly critical, intensely supervised safeguard against the inadvertent facilitation of illegal activities.

But, where expanding watch lists and regulatory frameworks creates complexity, technology provides clarity. When it comes to KYB, firms should be adopting technology that allows them to seamlessly onboard business clients — technology that allows lawyers and legal professionals to link ultimate beneficial owners (UBOs), directors and shareholders into a single, manageable, and monitored entity, with ongoing monitoring of company details, ownership structure, PEPs and sanctions, and watchlist checks and instant access to UK and international company reports.

To read the full guide, click here.

 

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