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Attorneys-at-Law Must Invest in Risk Identification and Assessment to Combat Money Laundering and Terrorist Financing

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As the legal profession continues to evolve, attorneys-at-law are facing a growing threat of money laundering and terrorist financing (ML/TF). To mitigate this risk, it is essential for attorneys-at-law to invest in effective risk identification and assessment procedures.

The Importance of Risk Identification and Assessment

The Anti-Money Laundering and Combating Financing of Terrorism Act (AML/CFT) requires attorneys-at-law to identify potential ML/TF risks faced by their clients. This includes assessing the activities undertaken by them, the type and identity of the client, and the nature and origin of the client relationship.

Steps for Attorneys-at-Law

To perform a risk assessment, attorneys-at-law should:

  • Evaluate clients at the inception of the client relationship
  • Analyze publicly available information and reference FATF Guidance on indicators and risk factors
  • Ongoing monitoring and review of the client-transactional risk profile are also crucial in identifying potential risks

Categorizing ML/TF Risks

Attorneys-at-law can categorize ML/TF risks by applying various categories, including:

  • Country or geographic risk
  • Client risk
  • Transaction risk

The weight given to each category may vary depending on the size, sophistication, nature, and scope of services provided by the attorney-at-law and/or accounting firm.

High-Risk Jurisdictions

Jurisdictions with AML/CFT regimes that fall below acceptable standards may be considered high-risk, as well as those that support terrorist activities or are known for significant political corruption. Attorneys-at-law should exercise caution when doing business with individuals from such countries, particularly if there is a high level of drug trafficking or corruption.

Staying Informed

To stay informed about ML/TF risks, attorneys-at-law should:

  • Observe public statements issued by the Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force (CFATF)
  • Lists of non-compliant countries published by competent authorities

Conclusion

Effective risk identification and assessment are critical components of an attorney-at-law’s AML/CFT program. By investing in these procedures, attorneys-at-law can mitigate the risk of ML/TF and maintain the integrity of their legal practice.

Sources

  • FATF Guidance for a Risk-Based Approach for Legal Professionals
  • Financial Intelligence Unit Guideline No. 3 of 2021 - High-Risk Customers

Note: This article is intended to provide general information only and should not be considered as legal advice. Attorneys-at-law are advised to consult with relevant authorities and experts in the field to ensure compliance with local regulations and guidelines.