Dependency on outdated screening practices leaving firms exposed to risk

UK law firms remain oblivious to sanctions screening requirements of new and existing clients, and demonstrate a worrying lack of understanding around Her Majesty's Treasury (HMT) screening obligations, according to Compliance Screening and Data Management specialists Datanomic Ltd, and Legal RM, experts in risk management and compliance.

A recent survey of 115 firms in England and Wales conducted by The Law Society revealed that 74% of law firms surveyed have not checked their entire client list against HMT Sanctions lists, and 48% of firms do not screen new clients against HMT Consolidated Sanctions lists. Worryingly, it appears that many firms are still relying on outdated e-verification systems or monitoring systems that are incapable of cross checking aliases, abbreviated names, names that are transposed, or names that are transliterated from foreign characters into Latin characters. This means there is a high likelihood that law firms are unknowingly acting on behalf of terrorists, criminals, fraudsters, drug traffickers, gang leaders and money launderers.

Lack of understanding of mandatory financial crime requirements, and failure to comprehensively screen clients are placing law firms at risk of sanctions breach

The legal sector is falling behind in sanctions screening, placing many law firms at risk of a serious sanctions breach, according to Compliance Screening and Data Management specialists Datanomic Ltd, and Legal RM, experts in risk management and compliance. Lack of understanding of mandatory financial crime requirements, failure to comprehensively screen ongoing clients, and complacency amongst law firms are placing individual solicitors, compliance managers, and law firms at risk of heavy financial penalties, both personally and corporately.

Although law firms understand the law itself, they are failing to apply it operationally in their own business practice. The UK Proceeds of Crime Act, The Prevision of Terrorism Act 2008, the Weapons of Mass Destruction Act, and the US Treasury Department's Office of Foreign Assets Control (OFAC) Sanctions List make it illegal to do business with sanctioned individuals or entities linked with the proceeds of crime or the funding of terrorism. For law firms, this means that unless they are in a position of privilege with a client, they are liable and accountable to the letter of the law, especially in their client screening obligations. Likewise, law firms must also comply with the regulatory obligations around anti-money laundering, including the EU 3rd Money Laundering Directive, the Money Laundering Regulations 2007, as well as the Solicitors Regulation Authority and the Law Society.  They must also carefully consider the business risk of new clients in the context of these legal and regulatory obligations.

Legal RM Signs Partnership Agreement with Datanomic Ltd, Providing Anti-Money Laundering and Conflict of Interest Solution

Partnership to Deliver Datanomic's Sanctions/PEP Screening Solution to Legal Sectors in UK, Europe and Australasia

Legal Sector Should Brace Itself for Increased Anti-Money Laundering Scrutiny in Wake of Global Financial Crisis. Both individual solicitors and law firms will face greater pressure for KYC compliance as part of defensive risk management strategy

Individual solicitors and legal firms will come under greater scrutiny in 2009 as prosecutions against money laundering increase and the ripple effects of increased fraud from the credit crunch hit the legal industry, according to compliance and screening specialists Datanomic Ltd, and risk management and compliance experts, Legal RM.  In particular, solicitors acting as Money Laundering Reporting Officers, or individuals who facilitate the acquisition, retention, use or control of laundered money, should expect hefty fines and prison sentences. 

Last month, Isleworth Crown Court fined Jonathan Krestin, 60, the managing partner at Butcher Burns, a commercial and property firm of solicitors, £5,000 on one count of money laundering.   He was convicted of using the firm's client account to launder money belonging to Michel Namer, a French national and convicted fraudster. An investigation by HM Revenue and Customs showed that Krestin transferred €14,000 from Namer to an Italian account of Namer's mistress and former lap dancer, Dzindzer Jeles, knowing or suspecting the monies to be criminal property.  This sum was part of the proceeds of a €35,000,000 Missing Trader Intra Community Fraud orchestrated by Michel Namer.
"Law firms are obliged under the 3rd EU Money Laundering Directive to regularly and thoroughly screen their clients against Sanctions lists," said Dr Jonathan Pell, CEO of Datanomic Ltd. "Know-Your-Customer and risk management protection initiatives have already become mandated and defensive strategies in protecting financial institutions against money laundering, and we expect the legal sector to follow suit. Law firms must ensure the proper protection measures are in place to protect both individual members of staff, as well as a firm's reputation."

Legal Service Provider standardises money laundering screening using Datanomic's dn:Director Sanctions & PEP Screening Software

AML/Compliance screening specialists, Datanomic Ltd, today announced that legal services provider, DLA Piper, has selected Datanomic's dn:Director Sanctions & PEP (Politically Exposed Persons) Screening software. DLA Piper will be using the software as part of its strategy for achieving compliance with the 3rd EU Money Laundering Directive and other applicable legislation. The Datanomic software will be used throughout DLA Piper's EMEA and Asia operations, which includes more than 40 offices in 27 countries.

Globally DLA Piper has over 3,700 lawyers, more than 2,000 of which are based in EMEA and Asia. The legal practice represents multinational, national and local clients across a range of geographies, including Global 1000, Fortune 250 and FTSE 350 companies or their subsidiaries.

Legal RM are proud to announce the inaugural Risk Management Networking Forum, bringing together Risk & Compliance Experts from Professional Services and Law Firms. Building on the success of our London based forums we are proud to be able to launch an informal networking event specifically for the Scottish legal community.

This inaugural networking event will be informal and is open to various stakeholders including MLROs, Risk & Compliance Managers, IT, Facilities & Marketing staff as well as Heads of Professional Standards. Future events will be topic focussed, none sales and free to attend - providing firms with the opportunity to share ideas, discuss best practices & challenges facing leading law firms.

To register or If you would like further information on this event please email our team on mailto:info@legal-rm.comwill

European Law Firm, SJ Berwin, Standardises on Datanomic's dn:Director Sanctions/PEP Screening Software for EU 3rd Money Laundering Directive 

Automated Solution Enables Firm to Pro-actively Screen Its Client Base

AML and Data Quality specialists, Datanomic Ltd, today announced that leading European law firm, SJ Berwin LLP, has adopted and deployed its Sanctions/PEP Screening solution as part of its anti-money laundering strategy to support its compliance with the EU 3rd Money Laundering Directive. SJ Berwin went live with the Datanomic solution in January 2008. The firm uses Datanomic as a major tool for risk assessment and ongoing monitoring.