By Legal Futures Associate Minerva
Economic crime costs the UK around £88 billion each year, with the UK in second place for global money laundering (beaten only by the US). In addition, the legal sector continues to be assessed as “high risk” for money laundering exposure – especially when it comes to conveyancing, trust, and company services.
The legal profession has stringent anti-money laundering (AML) compliance standards to combat the threat of dirty money. And, when it comes to stopping criminals, this starts with client onboarding. Law firms must know exactly who their clients are and exactly where the money is coming from.
The good news is that digital ID – otherwise known as electronic identity verification or eIDV- is a powerful tool for helping firms achieve AML compliance. Here are just some of the benefits.
Enhanced Identity Verification
Digital ID solutions offer more robust identity verification capabilities than traditional methods. This empowers firms to verify their customers with confidence. Digital IDs use advanced technologies like biometrics for a higher level of authentication. In addition, identity documents, such as passports or driver’s licenses, are reviewed to check for correctness.
For example, as well as NFC chip reading (the chip in your passport), Minerva uses facial recognition software, liveness assurance technology, and mobile phones to ensure ID documents are genuine. This results in accuracy levels of up to 97.7%
Ease of Identity Verification
As well as providing robust ID checks, eIDV offers a more user-friendly experience. Traditionally, clients needed to bring their proof of ID and address documents to their solicitors to comply with AML and Know Your Client (KYC) regulations. But this can be a burdensome process, especially when clients live far away.
With digital ID, verification checks can be done in minutes, without clients having to attend face-to-face meetings. With Minerva, this can be performed via a simple-to-follow app on a smartphone/web application.
“The Minerva solution has made quoting and onboarding clients much quicker and easier for us. We pride ourselves on providing the very best in client communications – Minerva helps make the customer journey that much easier. Significantly we have been able to really reduce the amount of post we send and therefore the amount of paperwork the clients have to complete.” – Sarah Edwards, Beyond Conveyancing
Saved fee earner hours and costs
When a firm implements electronic identity verification, this reduces the fee-earner burden of carrying out manual checks. Not only does this save the firm money as fee-earners are free to concentrate on more revenue-generating activities, but it can also help to reduce staff turnover. Let’s face it, nobody wants to waste time on burdensome processes, and modern employees are far more likely to leave firms that don’t give them the tools they need to work effectively.
Improved customer due diligence (CDD)
Digital ID systems force firms to adopt streamlined, automated customer due diligence (CDD) processes. As well as removing the burden from fee-earners and improving efficiency, this also ensures consistency in the application of AML policies – with systems that do not allow for steps or checks to be skipped. Furthermore, automating the onboarding process reduces the number of human errors – especially by people who are busy and stressed.
What’s more, with modern eIDV systems able to detect and highlight suspicious transactions and high-risk activities quickly and easily, firms can proactively investigate any worrying activity that may indicate potential money laundering. For example, Minerva lets firms delve deep into a client’s funds, providing a complete overview of Source of Funds (SoF) and Source of Wealth (SoW), so solicitors can easily spot red flags and make solid evidence-based conclusions to mitigate risk.
Improved Auditability and Reporting
As well as ensuring that law firms follow the correct actions and checks, digital ID systems also provide an audit trail. So, solicitors and firms can demonstrate that they follow the proper customer interactions, verifications, and compliance processes. And, as well as providing a comprehensive record of the AML compliance efforts taken, eIDV ensures that solicitors can justify their decisions and actions in case of regulatory audits or investigations.
Another benefit of outsourced digital ID solutions is that they allow smaller firms to benefit from industry-leading customer verification processes and keep up with their evolving regulatory requirements – all at an affordable cost. And they can be sure that, as compliance standards evolve, their onboarding partner will invest in the software to ensure firms remain compliant without significant disruptions, increased costs or manual rework.
When it comes to client onboarding, Minerva’s intelligent legal tech ensures a robust approach to eIDV that helps to mitigate the risk and gives firms everything they need to ensure compliance.