KYC and AML: Best Practice in Financial Institutions and Law Firms

12th April 2018 1547 - Blog Posts

KYC and AML: Best Practice in Financial Institutions and Law Firms

In a bid to tackle money laundering, terror financing and the like, global regulators are increasing their demands on financial institutions and law firms in order for them to meet their obligations vis-à-vis KYC and AML obligations.

June 2017 saw the UK’s AML regime amended to implement the Fourth Money Laundering Directive (MLD4) which has increased the work load on already stretched compliance departments around the world.  Though these reforms do not deviate from the previous frameworks they do add to them.  Financial institutions and law firms alike are already responsible for developing their own risk-based responses to compliance; and the deferring policies and requirements imposed on each individual institution can make these obligations particularly time consuming to adhere to.

Moving forward, firms must now have a complete AML/ KYC programme implemented, have adequate resources in place to monitor and enforce compliance, have adequate controls and oversight over their AML programmes, respond to any changes quickly, produce comprehensive reports, comply with latest data security rules, and be in a position to provide full audit trails.  Firms of all sizes are struggling to keep up with the increased compliance and regulatory burdens imposed on them in an efficient and cost-effective way.  For these reasons we are seeing an increased demand for third party service providers to help combat the increasing number of challenges that they face.

While technology can, and will of course, provide some much-needed relief to compliance departments in the form of shared ledgers, FinTech and RegTech, we would strongly argue that the human touch is still very much needed.  To be able to combine the implementation of new technology with the manual analysis and review of the captured local data, will give any organisation the best possible tools to ensure full compliance with regulatory KYC and AML obligations on a global scale.

For more information on the challenges financial institutions and law firms face in relation to KYC and AML regulatory obligations and insights on ready available solutions, read our latest thought leadership article here.