intappRisk Update

Client Due Diligence Risk — Why US firms should implement AML processes (Sponsor Spotlight)

Posted Dan Bressler

 

In our May sponsor spotlight, Intapp’s Bryn Bowen echoes a point the ABA + ALM Editorial Board just highlighted — the prudence of enhancing client due diligence: “Why U.S. law firms should voluntarily implement anti-money laundering processes” —

  • “When the U.S. Senate blocked the Enablers Act in December 2022, law firms avoided new regulatory requirements to conduct anti-money laundering (AML) checks on clients. But law firms already have compelling reasons to institute AML and Know Your Client (KYC) processes.”
  • “Whether your law firm is based in the U.S. exclusively or has offices around the world, implementing AML and KYC processes presents several upsides, helps you avoid significant risks, and is easy to carry out with the right technology.”
  • “When you accept a new client, you want to make the full resources of your firm available to them. Thus, if you’re a global law firm, it’s beneficial to onboard U.S.-based clients in a way that enables you to transfer work to overseas offices or to take advantage of advice and services provided by your offices outside of the United States. Even if the client doesn’t anticipate needing the counsel of your lawyers in other countries, best practice recommends keeping the door open to that possibility.”
  • “The optimal way to onboard a U.S. client to other offices across the globe is to implement a consistent AML and KYC standard that all firm offices adhere to regardless of whether operating in a regulated or unregulated jurisdiction. Once a firm settles on a standard for all offices, having a consistent process can significantly increase the efficiency of the client onboarding lifecycle and improve the experience of the internal team and client.”
  • “Onboarding the client without implementing any kind of AML process would limit the jurisdiction of the work you could undertake for that client. Should the client later have a matter requiring the counsel of your attorneys in other countries, the work would have to await completion of AML checks, causing delays and risking dissatisfaction.”
  • “So, how can your firm implement AML and KYC processes? If you’re a strictly U.S.-based law firm, following a voluntary risk-based approach to preventing money laundering, as the American Bar Association recommends, is a sound strategy.”
  • “Setting up these checks and verifications involves creating defined workflows and forms as well as enabling cross-checking of data against third-party databases. Because of these complexities, software purpose-built for these processes makes them easier to implement and track.”
  • “As the United States works to strengthen its approach to preventing money laundering through the Corporate Transparency Act and its beneficial ownership reporting requirements , law firms have an important self-directed role to play in preventing criminal behavior and its devastating social, economic, and security consequences.”
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