The third plenary at the Law Society’s 2023 Risk and Compliance conference tackled the challenges surrounding money laundering. It specifically focused on source of wealth, source of funds, sanctions, identity verification, and, most importantly, how it impacts the legal profession.
Amy Bell, Chief Executive Officer at Teal Compliance
Colette Best, Director of Anti-Money Laundering at the Solicitors Regulation Authority
Suzie Ogilvie, Global Head of Financial Crime and Sanctions at Freshfields Bruckhaus Deringer
Harriet Holmes, AML Services Manager at Thirdfort
Rick Kent, Anti-Money Laundering and Economic Crime Manager at the Law Society, chaired the panel.
Setting the scene
When it comes to maintaining a risk-based approach to AML, there's no doubt that legal practitioners have their work cut out. Amy Bell highlighted the biggest concern she's seen across firms: constantly changing regulatory expectations, which make it tough to know just how deep they should dig to check for risks, and how many resources they should dedicate to it.
Colette Best's biggest concern was the rate of change in AML and sanctions compliance matters, which are evolving at an incessant rate. This rapid change, particularly in the sanctions space, makes it almost impossible for firms to keep up.
Finally, Suzie Best emphasised how it's not enough to just tick boxes and go through the motions of compliance. Rather, firms need to ensure they're doing the right thing. She recommended asking key questions to get a better understanding of their client and verifying information independently.
Understanding source of wealth and source of funds
The panel took time to distinguish between source of wealth and source of funds.
Source of wealth refers to how an individual accumulated their wealth over time, while source of funds refers to what their bank statement shows. These two are often conflated but are very different matters.
Source of funds simply demonstrates that the individual has enough money to pay for the matter and that those funds come from a particular account. Source of wealth, on the other hand, provides nuance and context to the individual's accumulation of wealth and any associated risks or ethical considerations.
Uncovering source of wealth and sanctions compliance
When it comes to AML and sanctions compliance, there's often more at play than simply checking a name off a list. In fact, uncovering the source of someone's wealth is a highly complex task.
Similarly, staying compliant with sanctions requires much more than just being aware of the latest lists. In many cases, due diligence must be done on family members and wider networks. Why? Because individuals who are sanctioned often have ways of concealing their assets.
Even when it comes to staying knowledgeable on the latest sanctions lists, traditional compliance tools and practices can't always keep up. In fact, the number of sanctioned entities and products can skyrocket from 30 to over 100 practically overnight.
This rapid pace of change means that firms must be vigilant and adaptable, always ready to adjust their strategies and tools to stay on top of the latest developments.
Move forward with Xapien
The world has moved on from tick-box compliance. Now, firms can make more informed decisions about who they choose to work with, and that's where Xapien comes in.
At Xapien, we believe that there's a better way for legal practitioners to conduct due diligence on their clients and prospects, and we’ve developed an artificial intelligence tool to do just that. By entering the name of an individual or organisation into our cloud-based platform and hitting go, an executive-level report is generated in minutes.
But our reports go further just checking for PEPs, sanctions, and watchlists. They also provide nuanced and contextual information about the subject in question. This includes both positive and negative media, corporate affiliations, descriptions, quotes, close associates, business partners, and more. In short, our tool enables legal professionals to conduct deep due diligence in a matter of minutes, not days.
Curious to see how Xapien works? Book a personalised demo today to learn more.