Digital ID tools “do not breach legal services regulation”

Salasky: Digital ID tools more certain and effective

Solicitors should not view digital identity verification as a second-best option after traditional manual checks, according to a joint statement by LawtechUK and the regulatory response unit backed by legal regulators.

The statement follows a marked drop-off in the use of digital means of verifying identity since an upsurge during the peak of the pandemic, when remote working was the norm.

This was in part due to a common misconception that legal regulation prohibited the use of digital ID tools, even though in fact they could be faster, more accurate and more cost-effective than manual methods.

The statement put to rest another misplaced concern, that using digital methods would put a lawyer in breach of their obligation not to outsource their anti-money laundering (AML) responsibilities.

Jenifer Swallow, director of LawtechUK said: “The joint statement sets out to erase the lingering myth that legal services regulation prevents the use or reliance on digital means of identity verification in law.

“Responsible selection, adoption and implementation of these tools can help improve compliance practices and client service across the legal sector.

“Digital identity technology has become a valuable tool in combating money laundering risk across industries worldwide. It is critical that the legal community keeps up with advancements in technology and focuses on how they can be best used for the benefit of their clients and wider society.”

The statement said the government was working to encourage and unify ID verification across sectors by developing the UK Digital Identity and Attributes Trust Framework.

In the meantime, digital identity verification commonly used now in the banking and other industries tends to require original documents, coupled with mobile phones which can take detailed photographs or video of live applicants and are uploaded alongside scans of passports or identity cards.

The information can then be checked by comparing data points to identify fakes, read chipped documents – such as biometric passports – and scrutinise online red-flag lists in real-time, such as those administered by Interpol.

Automated checks can also be made of databases of known stolen documents, as well as fraudulent and synthetic identities. The resulting conclusions are potentially much more extensive than those from a manual assessment of document authenticity using the human eye.

Iain Miller, a legal regulatory partner at City firm Kingsley Napley, said: “As the practice of law develops, we need to make sure that legal professionals are using the most efficient and effective ways of managing risk. Digital IDs offer, in most cases, a better solution than traditional manual checking.

“As this paper demonstrates, they are encouraged by regulators. There is no reason for legal professionals to avoid their use as a matter of principle. The debate should move onto what is the best system and how it can be implemented.”

Julia Salasky, chief executive of Legl, a company that helps law firms on-board clients securely, said: “We see that the law firms that use digital ID technology – and alongside it, ongoing risk monitoring and other top in class AML tools – have driven far more certainty and effectiveness in their AML compliance operations.

“Firms have also noted the ancillary benefits – the ability for clients to benefit from the same modern, digital experience that they have come to expect from other industries like banking.”

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