KYC: automatic compliance
Wayne Johnson, CEO and Co-Founder of encompass, explains how new money laundering legislation is affecting the way professional services firms conduct their business and how automation can ease the regulatory burden…
What has been the impact of new money laundering regulations in the UK (MLR 2017) for the professional services industry?
Put simply, the new legislation casts a wider net. Anti-money laundering (AML) activity is a high priority for government, given the increasing focus on terrorism financing and the fact that a high proportion of that funding is laundered through criminal activity.
Whereas in the past financial institutions had an obligation to prove that they were following the correct know-your-customer (KYC) procedures when transacting with a client, the same regulations now apply to the professional services industry and requires their regulators to enforce them.
The principle is the same with any kind of fraudulent activity: if you clean up one area, criminals move on to another. This is what is happening now; criminals are moving on from financial services firms to target professional services firms, such as legal practices and accounting firms, many of whom are finding themselves unwittingly part of a money laundering transaction.
There are now fines in place that will apply to professional services firms that do not implement the correct KYC procedures. Every financial services company needs to have an officer responsible for AML compliance, and now, so too does every professional services firms, right down to a sole legal practice.