Financial Crime World

Law Firms Must Tighten Up on Anti-Money Laundering Measures

In an effort to combat money laundering and terrorist financing, lawyers are being urged to adopt stricter anti-money laundering (AML) measures. The Financial Intelligence Authority has outlined several key requirements that law firms must comply with in order to prevent the misuse of their services.

One area of concern is the use of complex legal structures, such as trusts, foundations, and offshore companies, which can be used to conceal the true beneficial owner or source of funds. Lawyers are being told to:

  • Verify the identity of clients and beneficial owners
  • Obtain information on the purpose and nature of business relationships

Identifying Politically Exposed Persons (PEPs)

Lawyers must also identify whether a client is associated with PEPs, particularly when dealing with foreign customers. Enhanced due diligence measures must be applied in these cases to ensure that transactions are legitimate.

Due Diligence Measures

Implementing Effective Measures

To prevent money laundering, lawyers must implement the following due diligence measures:

  • Verifying the identity of clients and beneficial owners
  • Obtaining information on the purpose and nature of business relationships
  • Conducting ongoing monitoring of business relationships
  • Identifying and verifying the identity of third parties acting on behalf of clients

Identifying High-Risk Clients

Lawyers must also identify high-risk clients and apply enhanced due diligence measures to prevent money laundering. These measures include:

  • Obtaining further information
  • Applying extra measures to verify documents
  • Establishing the source of funds

Record Keeping and Internal Controls

In addition to implementing due diligence measures, lawyers must:

  • Keep accurate records of all transactions for a minimum period of 10 years
  • Include records of customer identification, transaction details, and suspicious activity reports
  • Develop and implement internal control measures to prevent money laundering and terrorist financing
  • Appoint a money laundering control officer
  • Ensure that all employees understand and comply with AML/CFT procedures

By adopting these measures, lawyers can help prevent the misuse of their services and contribute to the fight against money laundering and terrorist financing.