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KNOW YOUR CLIENT - IGNORANCE IS NO LONGER BLISS

In Conclusion

With increasing pressure upon solicitors to ‘get it right or face the consequences’ online identity verification must be worth examining.

It is quick, simple to use and greatly de-risks the take on of new client business. It is also extremely client-friendly and particularly useful in ideal potential high-risk ‘new client not present’ situations. Online verification is much less time consuming and accordingly less costly than the manual method.

Another fact supporting the move to online verification is that compliance and reporting requirements are extremely unlikely to diminish in the future. Indeed the converse seems to be the case.

The new Money Laundering Regulations, effective December 15th 2007, contain a requirement to check all prospective clients identified as high risk against the Politically Exposed Persons register. This search is only available online, from a limited number of sources.

There is also a new requirement for MLRO’s to report transactions where they suspect funds may include sums of unpaid tax – even if the business producing the profits is legitimately trading (see Court of Appeal judgment in R v I K (2007) EWCA Crim 491).

Whichever route is taken (manual, online or a combination thereof) the logging and auditing of returned results within the practice management system is vital. It ensures the practices ‘beleaguered’ MLRO can speedily and easily monitor regulatory compliance across the whole practice, and report accordingly.

Pro-active monitoring and control is essential to ensure practices acting in good faith do not unwittingly fall foul of changing regulations.

Author: Tony Klejnow, Managing Director, Linetime Limited

NB: To assist their customers through this potential minefield Linetime has launched a solution based on the integration of leading credit reference agency CallCredits CallML service within its Liberate suite of legal software.

The Liberate user can now access CallCredits massive array of data sources directly from their desktop and request verification of the identity of one or more clients. The Liberate/CallML interface feeds client details into the search system which uses data from 16 different datasets to confirm (or question) the client’s identity.

The results are immediately e-mailed back to Liberate which automatically includes them within the client history file. Customer identity check details are then available as an integral, and reviewable, item within the firm’s risk assessment and due diligence process.