Can I use technology to carry out AML and sanctions checks on clients?
“Is there guidance on using technology to conduct client due diligence (CDD) and sanctions checks on clients?”
A wide range of regulatory and compliance-related technology is available to legal practices to help you comply with your anti-money laundering (AML) and anti-terrorist financing duties.
This is commonly referred to as 'regtech'.
These tools can broadly be split into three categories:
- electronic means to help legal practices verify an individual's identity
- corporate registry and beneficial ownership checkers
- electronic tools to screen clients against sanctions, politically exposed persons (PEPs) and adverse media watchlists
Some tools are free to use. However, many of these services are made commercially available by third parties.
A practice must have clearly documented policies, controls and procedures based on your practice-wide risk assessment.
This includes measures taken when new technology is adopted to protect against money laundering or terrorist financing risks.
Where practices use electronic identification and verification tools, they should document:
- the role of the tool
- the data sources it uses, and
- in what circumstances (clients and/or matters) it is appropriate to use the solution
For more information, see chapters 6 and 7 of the anti-money laundering guidance for the legal sector.