Are you taking too much risk from onboarding clients?
7th August 2019 3639 - Blog Posts
Onboarding clients and investors can carry a great deal of risk in the current climate when compliance procedures are so stringent. How could Lawson Conner’s MaxComply software support your business with the onboarding process?
AML and KYC
The biggest risk factors centre around Anti-Money Laundering and Know Your Customer. AML regulations have been big news recently as some financial services and law firms have been found not to be compliant with the latest directives, leading to some large fines from the regulator.
Onboarding must be compliant with the latest anti-money laundering regulations, which means recording information about customers, their sources of finance and noting high-risk jurisdictions or politically exposed persons.
The latest AML directive
To complicate matters further, the fifth iteration of the Anti-Money Laundering Directive comes into force in January, and this features a new ‘blacklist’ of high-risk countries, a call for enhanced due diligence and the necessity to verify beneficial ownership among other changes. The FCA has also stated its commitment to cracking down on money laundering and the financing of terrorism, outlining it as one of its key priorities in its 2019/20 business plan, which suggest there could be severe penalties for failure to comply.
Maintaining a robust audit trail
In addition to AML and KYC requirements, other regulatory issues must be considered when onboarding and a robust audit trail must be maintained to satisfy reporting requirements. Compliance software, such as MaxComply is the best way to provide this audit trail, minimising human error and proving that due diligence has been carried out.
Keeping policies updated
Another key risk factor for onboarding is the fast pace with which regulatory change is taking place, meaning firms must ensure that policies are constantly updated and that local nuances in different jurisdictions are applied where there is a global footprint. With the prospect of Brexit still looming, this is more relevant than ever, as UK regulation may diverge from EU law.
Our onboarding software can negate these issues, taking on some of the burden of risk and ensuring that your firm remains compliant. Our software, MaxComply can reduce the risks of onboarding by 50-80% and can save time and reduce the risk of human error, leaving your team free to focus on core, profit-generating activities.
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