Specialised Solutions for Lawyers’ AML /CFT Compliance Management

We offer a comprehensive set of anti-money laundering (AML), counter-terrorist financing (CFT), and fraud prevention solutions for law firms’ anti-money laundering compliance that are tailored to applicable AML/CTF (aka CTF) laws, regulations, AML/CTF supervisors' guidance for the legal sector, sector-specific red flags and indicators, to help your business meet applicable obligations that cover law firms’ money laundering and terrorist financing risk mitigation, the detection and handling of other types of financial crime.

We have designed our AML solutions to help you navigate the complexities of law firms’ AML obligations in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of lawyers’ AML compliance, including but not limited to:

• Business Profile and Strategic Factors:
• Your commercial objectives
• Your products
• The size and structure of your business
• Your available AML/CTF compliance technology and resourcing
• Your risk appetite for AML/CTF-related risks
• Your governance framework and reporting lines
• Your client demographics
•  Your countries of operation

• Operational AML/CTF Compliance Requirements:

• Money laundering and terrorist financing (ML/TF) risk assessment
• AML risk management
• Customer due diligence (CDD) and Know Your Customer (KYC) obligations for law firms
• Enhanced customer due diligence
• Ongoing customer due diligence and transaction monitoring
• PEP identification and sanctions compliance
• Staff vetting and AML/CTF training
• Ad-hoc and periodic reporting
• Other obligations relating to law firms' anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

 

What Jurisdictions Do Our Lawyers’ AML Solutions Cover?

• Law Firms' Anti-Money Laundering in the United Kingdom: Law firms' AML obligations in the United Kingdom are outlined under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, last amended in 2020, with AML compliance typically overseen by professional bodies like the Solicitors Regulation Authority (SRA) or the Bar Standards Board.
• Law Firms' Anti-Money Laundering in the European Union: Law firms' AML compliance across the European Union is governed by the Sixth Anti-Money Laundering Directive (AMLD6), with national supervision by the National Competent Authorities in each EU member state.
• Lawyers' Anti-Money Laundering Obligations in New Zealand: Law firms' AML requirements in New Zealand fall under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009, with the Department of Internal Affairs (DIA) overseeing compliance.

Law firms, alongside accountants, real estate agents, and company formation service providers, are often considered “gatekeepers” in AML compliance. Money launderers often target these professionals to facilitate illicit funds, obscure ownership structures, and disguise the origins of criminal proceeds. Consequently, law firms have AML obligations in several jurisdictions, while in others, discussions are ongoing about shifting responsibility for the legal sector's money laundering prevention to lawyers and law firms.

For example:

• United States: While law firms are not universally required to maintain comprehensive AML programs under the Bank Secrecy Act (BSA), certain activities involving large cash transactions may be subject to FinCEN guidance, and potential new regulations are under consideration.
• Australia: Currently, law firms are not directly subject to the AML/CTF Act 2006 in Australia. However, there is active debate regarding the inclusion of legal services under AML/CFT obligations.
• Singapore: Law firms in Singapore are generally not under direct Monetary Authority of Singapore (MAS) supervision for AML. However, activities like company formation and client fund handling may fall under broader AML/CFT standards.

 

 

Which Types of Law Firms Do We Support?

Focusing on money laundering (ML), terrorism financing mitigation (TF), and fraud prevention, our law firms’ AML solutions cover the following types of legal service providers that are deemed to be AML/CTF reporting entities (aka “designated service providers”):

• Corporate Lawyers and Firms
• Real Estate Lawyers and Conveyancing Specialists
• Litigation and Dispute Resolution Firms
• Intellectual Property Firms
• Family Law Practices
• Trust and Estate Lawyers

Lawyers’ AML Advisory and Support

Our AML/CFT advisory services for law firms include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to the law firms’ AML obligations for different processes, including but not limited to customer due diligence (CDD), transaction risk scoring, transaction monitoring, customer onboarding and know-your-customer (KYC) analysis, and other AML processes. Also tailored to the specific money laundering and terrorist financing (ML/TF) risks involved in these processes, helping you with effective ML/TF risk management.
• Law firms' fraud risk management advice: Advising on measures, controls, and processes for detecting, preventing, and responding to different types of fraud, scams, and other types of financial crime relevant to law firms. Also, tailored to the fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising lawyers on AML/CTF issues related to maintaining and expanding their banking relationships, complying with banks' AML/CTF risk appetite standards, recall procedures and expectations, and other operational requirements.
• Operational AML/CTF advice: Advising support and KYC teams on day-to-day onboarding, support queue management processes, allocating AML/CFT resources effectively, and making operational improvements to enhance overall customer experience and AML compliance efficiency.
• Specific matter advice (difficult clients, high ML/TF risk matters, customer due diligence for high-net-worth clients, complex transactions and more): Advising on handling specific AML/CTF issues related to clients and complex and unusual transactions, including assessing the adequacy of Sources of Wealth (SOW) or Source of Funds (SOF) information and documentation for specific enhanced due diligence (EDD) cases.
• Peer benchmarking and best practices: Helping law firms compare their AML/CFT practices with industry standards, AML/CTF supervisor guidance, and internationally recognised best practices set up by international organisations like the Financial Action Task Force (FATF) for complying with lawyers’ AML/CFT obligations.
• Government agencies liaison advice: Advising senior management and compliance teams on handling relationships with external bodies, including AML/CTF supervisors and law enforcement agencies, such as the FIU or its local equivalents.
• AML/CFT audit advice: Advising senior management and compliance teams on matters related to the statutory AML/CFT audits, including auditors' guidelines, requirements, AML/CFT audit process, and obligations related to the audit's outcome, tailored to both generic lawyers’ anti-money laundering compliance obligations and your specific situation.
• AML/CFT remediation advice: We help law firms to effectively navigate situations involving an AML/CFT breach, warning, or investigation. The cost of non-compliance can result in significant regulatory fines and penalties, as well as irreparable reputational damage. Therefore, when you are on your supervisor's radar, it’s essential to have AML/CFT advisors who know how to set things right and effectively engage with AML/CFT supervisors and other stakeholders. For more details, please visit our Remediation Solutions page.
• Further information: You can visit our AML advisory page for an extensive list of AML/CFT advisory services we offer to support lawyers’ anti-money laundering compliance, as well as AML/CFT compliance for other types of financial institutions and businesses subject to the AML/CFT regime.

 

AML/CFT Training and Capacity Building

We offer the following set of AML/CFT training and education solutions tailored to the lawyers’ AML/CFT compliance requirements:

• Customised AML/CFT Training Solutions: Specialised AML training sessions for various teams, including management, compliance, operations, sales, and customer relations, focusing on the law firms’ AML obligations, AML/CFT awareness, best practices, and ML/TF red flags.
• Up-to-date Regulatory AML Updates: Keeping your compliance officers, managers, and teams updated with changes in the law firms’ AML obligations, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to law firms’ money laundering, terrorist financing, fraud, and other types of financial crime.
• Practical Workshops: Interactive workshops for effective and goal-oriented AML/CTF compliance, capacity planning, and resource allocation, covering:

• KYC procedures for law firms
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The law firms’ money laundering risks, common money laundering schemes and terrorist financing methods
• Improvements in clients' onboarding and transaction monitoring procedures
• Reg-tech for AML compliance
• Internal and external AML/CTF reporting
• Related risk and compliance issues, including financial crime prevention
• Application of the risk-based approach to law firms’ money laundering, fraud risks, and terrorism financing
• Suspicious matter reporting guidelines
• The implementation of customer identification programs and KYC procedures
• Strategic and operational ML/TF risk management
• AML/CTF specifics of the Cross-border custodial services – optional
• Other obligations related to the law firms’ AML obligations (optional insert keyword)

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world law firms’ money laundering, terrorist financing, and common legal sector fraud scenarios, as well as specific challenges related to the lawyers’ AML/CTF compliance that your business is likely to face.
• Further information: You can visit our AML training solutions page for an extensive list of AML/CFT training solutions we offer to law firms and other businesses subject to AML/CFT regulations.

 

Comprehensive AML/CFT Managed Solution for Law Firms

Our lawyers’ AML/CFT compliance management solutions include but are not limited to:

• AML/CFT Compliance Leadership: We act as your dedicated AML/CFT compliance officers (aka “Money Laundering Reporting Officers” or (MLROs optional)) and as compliance managers, fully managing AML/CFT compliance and handling the lawyers’ anti-money laundering obligations for your business.
• Lawyers’ Anti-Money Laundering Risk Management: Conducting detailed assessments to identify ML/TF risks, assess their inherent impact and likelihood of occurrence for your business, evaluate the effectiveness of mitigations and controls in place, and formulate residual risk ratings.
• Managing Client Onboarding process and Customer Due Diligence: Implementing robust Know Your Customer (KYC), Know Your Business (KYB), customer due diligence (CDD), and enhanced due diligence (EDD) processes, for all types of clients, including higher ML/TF risk clients.
• PEP and Sanctions Screening: Managing thorough compliance with AML surveillance requirements by screening against global sanctions and politically exposed persons (PEPs) lists. This covers both initial and ongoing screening, as well as escalation processes for true positives.

• UBO Verification Streamlining: Verification of beneficial ownership in line with the lawyers’ AML requirements, identifying and assessing individuals who hold ultimate control over assets. This includes initial and ongoing checks, with procedures to address discrepancies and high-risk cases as they arise.
• AML Transaction Monitoring: Developing and implementing a set of business-specific ML/TF alerts and red flags to detect and report suspicious transactions, helping you comply with the lawyers’ AML requirements in a commercially efficient manner without making AML/CFT compliance a business hindering factor.
• Transaction Monitoring and Law Firms’ AML Obligations: Related to the above, we also help with the implementation of ML/TF alerts and red flags to detect, prevent, and respond to suspicious transactions and activities.
• AML/CFT Tech Handling: Leading the alignment of AML/CFT technology implementation with your business processes and AML/CFT objectives. This also includes reviewing AML/CFT technology against the lawyers’ AML requirements and your core policies and procedures.
• AML/CTF and Data Sharing: Handling information requests from law enforcement agencies, AML/CTF supervisors, and other relevant AML/CTF-designated entities—such as your banking partners, FX platforms, liquidity providers, finance providers, etc.—to help you manage your AML/CTF compliance-related communications.
• Internal AML/CFT Reporting Solutions: Facilitating structured reporting workflows for your board and its delegate committees, with a specific focus on AML/CFT compliance. This includes:

• preparing and presenting comprehensive AML/CFT performance metrics
• providing insights into AML/CFT compliance effectiveness
• reporting on the effectiveness of internal controls and mitigations for your general AML/CFT obligations and the sector-specific law firms’ money laundering risks
• identifying areas for improvement

Our AML/CFT compliance reports cover:

• your ongoing compliance status in relation to lawyers’ AML requirements
• ongoing progress against your organisation-wide AML/CFT compliance calendar
• alignment of your business's AML/CFT performance with specific project goals and relevant KPIs
• other factors to ensure that the management function is well-informed and aligned with AML/CFT compliance requirements for law firms.

• Lawyers’ AML/CFT Compliance and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with lawyers’ anti-money laundering requirements for reporting captured activities and transactions. This includes managing externally reportable matters covered by the following report types: Suspicious Activity Reports (SARs), Suspicious Matter Reports (SMRs), Suspicious Transaction Reports (STRs), Prescribed Transaction Reports (PTRs), Threshold Transaction Reports (TTRs), and their equivalents.
• Periodic AML/CFT Reporting: Organising and overseeing the preparation, data storage, and effective submission of required periodic reports to your AML/CTF supervisors, helping you comply with lawyers’ AML requirements for statutory reporting.

 

 

KYB Solutions for Lawyers’ Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with the law firms’ AML obligations. These include:

• Establishing ML/TF risk scoring models and parameters for different risk categories: We establish criteria to assess the ML/TF risk levels of your client base by identifying key risk factors based on their business nature, activities, jurisdictions, and other relevant characteristics and develop a risk scoring model to classify clients into different ML/TF risk categories such as low, medium, and high risk.
• Implementing a Customised KYB Process: We can help you roll out the KYB process across all departments to help your teams become sufficiently trained and equipped to handle clients' ML/TF risk effectively when it comes to verification, monitoring, ongoing due diligence, and other processes.
• KYB Technology and Automation: We select and evaluate technologies that can automate various parts of the KYB process, such as data collection, risk scoring, sanctions screening solutions, and ongoing monitoring.
• KYB-Related Escalation Process: We can develop and implement a clear escalation procedure for handling high-risk clients or irregularities, including the triggers for escalation, the actions required at each step, and the responsibilities for resolving these issues.

 

 

Core Policies and Procedures for Lawyers’ AML/CFT Compliance

We develop, enhance, and implement a set of core policies, manuals, frameworks, and procedures for effective lawyers’ AML/CFT compliance management, including the following:

• Lawyers’ AML/CFT Framework Development: Covering specific law firms’ AML obligations and obligations under national AML/CTF laws and regulations, any applicable AML/CFT guidance, your risk appetite, your existing human and technology resources, your business structure, your history of AML/CFT compliance, and your current and future business goals.
• AML/CTF Risk Assessments: Focused on the law firms’ AML obligations for risk management as they relate to specific ML/TF risks faced by your business in terms of its size, products, client types, jurisdictions of operation, delivery channels, and the financial institutions it interacts with when delivering its services. Also covering the assessment of the effectiveness of existing controls and mitigations in place to determine the residual risk rating for both general ML/TF risks relevant to the most designated service providers/AML/CFT reporting entities and industry-specific ML/TF risks faced by law firms as these apply to your business operations. Visit our AML/CTF Risk Assessment page for more information.
• Comprehensive AML/CTF Programs (aka "AML/CFT Programme" in some jurisdictions): When it comes to lawyers’ anti-money laundering compliance, your AML/CFT program is a core document that details how your business complies with various compulsory AML/CFT obligations, covering:
• the initial and ongoing CDD and EDD processes
• verification methods and requirements for identity, address, and source of funds
• internal and external reporting
• ongoing due diligence
• transaction monitoring
• employee vetting and training
• PEP and sanctions screening, and more

Our lawyers’ AML solution is about grounding your AML/CTF program in reality and developing it based on your circumstances, including:

• your AML/CFT Risk Assessment
• your available ML/TF systems and controls
• your available resources
• your compliance budget
• your AML/CTF compliance team's experience and size
• your stakeholders' interests
• your available AML technology and other relevant factors
• Further Information: Visit our AML/CTF Programs page for more information

• Lawyers’ AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of lawyers’ AML/CTF compliance. This is why our solutions cover the development and enhancement of a detailed set of AML/CTF procedures and protocols to meet the distinct needs of your business, with a focus on effective AML risk management across various business processes and the law firms’ AML obligations as they apply to each step of your customer journey.
• AML Manuals and Guidelines: These are more detailed, practical resources that support the procedures by providing step-by-step instructions, specific reference points, and standards. Depending on your business size and complexity, we develop and enhance internal manuals and guidelines necessary for effective and efficient AML/CTF compliance. These include AML Operating Manuals, guiding materials, and guidelines that outline what to do for each process, step, or decision within your procedures.
• ML/TF Controls Mapping: Implementing controls based on your documented risks is another cornerstone of lawyers’ anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to ensure compliance with law firms’ AML obligations, address specific financial crime, money laundering, and terrorist financing trends, and respond to any findings from internal and external AML/CFT auditors and supervisors.
• AML Red Flag Identification and Response Protocols: This is another area where a well-written AML policy or program must face the reality of operational speed, the workload across different teams, available tools, client base size, and other factors. That is why another part of our lawyers’ AML/CFT solution is to focus on developing clear guidelines for identifying and responding to red flags indicative of fraud, money laundering, or terrorist financing activities, enabling you to take timely and appropriate action in different circumstances.
• AML/CTF Policy Update: Assisting with the review and enhancement of your core AML/CTF documents and operational procedures to reflect changes in your AML policies, including those caused by:
• updates in the AML/CTF laws, lawyers’ AML regulations or AML supervisors’ sector guidance
• internal changes in your business structure, size, and resources
• the launch of new products or expansion to new jurisdictions
• changes in your risk appetite
• changes in related obligations, such as privacy laws, information sharing, legal sector fraud prevention requirements, and more
• AML/CFT issues identified during internal or external reviews or audits
• other relevant factors

 

AML/CFT Technology Integration Support

Streamlining AML Compliance: Our lawyers’ AML solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies to efficiently support lawyers’ anti-money laundering compliance management. This includes AML compliance technologies and tools that cover:

• Customer Due Diligence Automation
• E-KYC and Online Identity Verification
• Customer Onboarding Streamlining
• PEP and Sanctions Screening
• Ultimate Beneficial Owner (UBO) identification,
• KYB Solutions and AML/CFT Risk Management
• AML Alert Management
• Ongoing Due Diligence Obligations Management
• Internal AML/CFT reporting
• Lawyers’ AML/CFT Obligations for External Reporting
• AML/CFT Incident Management
• Exception Escalation and Management
• AML/CFT Management Automation: Including automated response workflows and AI technology
• Customisable AML/CFT measures specific to onboarding and monitoring of your high ML/TF risk clients
• Lawyers’ AML/CFT Obligations for Record-Keeping
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to law firms’ money laundering and terrorist financing red flags
• Effective CRM for handling Lawyers' AML Requirements

 

 

Lawyers’ AML/CFT Audit Solutions

Having over ten years of AML/CFT compliance experience, ranging from AML/CFT framework and controls development and testing to successful AML/CFT management and issues resolution for various reporting entities, gives us the necessary expertise and qualifications to be your AML/CFT auditors.

We offer two comprehensive AML/CFT audit options to review your compliance with lawyers’ anti-money laundering obligations. These options are:

Statutory AML/CTF Audit Option: A comprehensive review of your existing AML/CTF framework to assess whether your business complies with AML/CTF standards and applicable obligations. We independently test your compliance with both local AML/CTF obligations and sector specific law firms’ AML obligations. These often include but are not limited to:

• adherence to your AML/CTF risk assessment and operational AML/CFT procedures, including the existence of controls and mitigations to address money laundering and terrorist financing risks identified in your risk assessment
• compliance with your core AML/CFT documents, including sample testing
• your CDD requirements
• your staff vetting requirements
• your AML/CFT management processes
• your client onboarding and offboarding processes
• your EDD requirements, including source of wealth (SOW) and source of funds (SOF) requirements and application of the risk-based approach to different ML/TF risk levels
• your transaction monitoring process, covering large, complex, and unusual transactions and patterns
• your ODD processes
• your record-keeping process
• your suspicious matter reporting process (also known as "suspicious activity" or "suspicious transaction" reporting in some jurisdictions)
• your other reportable transactions process (typically covering cash and cross-border transactions)
• the way you detect and address material changes in client relationships
• your initial and ongoing screening process
• and other obligations for lawyers’ AML/CFT compliance

Assurance Levels: Our statutory AML/CFT audit options are available as both:

• A limited assurance audit
• A reasonable assurance audit

Further Information: Please visit our AML/CFT Audit page for more information.

Internal AML/CFT Audit Option: Apart from an independent statutory audit, we also offer an internal AML audit option to prepare law firms for an external audit by an independent auditor, an AML/CTF supervisor's review, or a review by another significant business stakeholder, such as a banking partner or an equity purchaser. This option is also suitable for significant business events like reorganisation or expansion.

Here, we go beyond merely meeting law firms’ AML obligations and focus on evaluating the effectiveness of your AML/CFT controls and ML/TF risk management processes for alignment with:

• the ML/TF risks faced by your business, including your Know Your Business (KYB) analysis
• lawyers’ anti-money laundering compliance obligations
• your current and future goals
• your business model
• your current and prospective client inflow
• the specific AML/CFT compliance areas or requirements (this process can be tailored to address particular AML issues or compliance areas, ensuring a targeted approach to lawyers’ anti-money laundering compliance)

We help you not only identify any gaps and weaknesses but also provide insights on how to enhance your controls and respond to these in a commercially oriented manner for smarter AML/CFT compliance. Please visit our Internal AML/CFT Review Solution page for more information.

 

AML/CFT audit-related solutions:

• Post-Audit Remediation Support: We assist with the implementation of post-audit remediation actions, addressing and resolving any identified AML/CFT issues.
• AML/CFT Attestation Support: Our lawyers’ AML solutions include helping you prepare the required attestations for your AML/CFT supervisor and other stakeholders. This involves confirming that all necessary remedial actions have been completed and that adequate AML/CFT compliance measures have been put in place.
• Post-Audit Stakeholders' Liaison: We manage your communications with national AML/CTF supervisors, banks, auditors, insurers, and other stakeholders, ensuring smooth progress in reporting on the status and completion of your post-audit action plan.

 

 

Broader Risk & Compliance Solutions for Law Firms

Your AML/CFT compliance is generally more effective when the right hand knows what the left hand is doing, and at the very least, they do not interfere with each other. Incorporating your controls and procedures for compliance with the law firms’ AML obligations into an overall risk and compliance management framework efficiently can increase your overall risk compliance effectiveness. This is where our experience can help you. Apart from AML/CFT compliance solutions for law firms, we include the following risk and compliance solutions:

• Compliance Advisory and Management: A comprehensive set of solutions for second-line compliance management, including both compliance advisory and compliance management options
• Third-line Compliance Assurance: A range of third-line compliance defence solutions covering compliance assurance program development and implementation, internal controls design, and controls testing solutions
• ISO Standards Compliance: A range of solutions for compliance with the International Organization for Standardization (ISO) standards, helping you prepare for ISO certification
• FATCA and CRS Compliance: A comprehensive set of solutions for complying with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) requirements, including tax residency verification, ongoing due diligence, reporting, and record-keeping
• Privacy Law Compliance: A range of solutions covering development, implementation, and testing of data privacy controls, procedures, and tools required to meet the applicable obligations under the Privacy Act, the GDPR, ISO 27701, etc.
• Financial Licensing and Registration: A set of financial licensing solutions for law firms, including preparation, licensing process management, regulator liaison, and post-licensing support in:
• The United States
• Australia
• The United Kingdom
• Singapore
• New Zealand
• The European Union
• Offshore financial centres and tax havens

 

 

Common Money Laundering Risks for Law Firms

Law firms’ money laundering risk types can be broadly classified into five categories:

• Product types (services offered)
• Delivery methods
• Customer types
• The institutions involved in delivering your services
• Jurisdictions of operation

 

Given the variety of products offered by different businesses, as well as their different business structures and operations, the examples below of money laundering risks faced by law firms represent only a sample and are not exhaustive.

 

Product-Related Risks and Lawyers’ AML Compliance

Some of the product-related ML/TF risks relevant to lawyers’ anti-money laundering compliance include:

• Misuse of Client Accounts: Lawyers’ trust accounts, without effective monitoring mechanisms, can be misused to obscure the origin of illicit funds or integrate criminal proceeds into the legitimate economy (applies to trust and estate lawyers, corporate lawyers).
• Complex Corporate Structuring Without Oversight: Assisting in the creation or management of complex corporate entities or offshore structures, particularly without scrutiny of beneficial ownership, increases ML/TF vulnerabilities (applies to corporate lawyers, intellectual property firms).
• High-Value Property Transactions Without Source of Funds Verification: Property deals facilitated by lawyers, if not accompanied by robust due diligence, present a significant risk of layering illicit funds (applies to real estate lawyers and conveyancing specialists).
• Creation of Charities and Non-Profit Organisations Without Due Diligence: Establishing or managing charities or non-profit entities without sufficient scrutiny of their purpose or funding sources may allow funds to be diverted for illicit activities, including terrorism financing (applies to family law practices, trust and estate lawyers).
• Certain Types of Litigation Financing: Funding or managing litigation cases, especially involving large sums or cross-border disputes, can be exploited to layer illicit funds if the source of funds is not adequately verified (applies to litigation and dispute resolution firms).
• Unmonitored Trust and Estate Planning: Advising on or managing trust and estate structures, particularly those with international elements or opaque beneficiaries, can facilitate money laundering if beneficial ownership is not clearly identified (applies to trust and estate lawyers).

 

Jurisdictional Risks and Lawyers’ AML Compliance

Some of the jurisdictional risks relevant to law firms’ money laundering prevention include:

• Weak Oversight for High-Risk Jurisdictions: Lack of mechanisms to identify and scrutinise funds originating from or flowing through jurisdictions with poor AML/CFT frameworks increases vulnerabilities to illicit fund flows (applies to corporate lawyers, trust and estate lawyers).
• Insufficient Due Diligence on Cross-Border Transactions: Failure to apply enhanced due diligence to transactions or clients linked to jurisdictions with high levels of corruption, tax evasion, or organised crime exposes law firms to ML/TF risks (applies to real estate lawyers, corporate lawyers).
• Limited Screening for Clients from Conflict Zones: Absence of rigorous controls to assess clients or funds linked to conflict zones or regions known for supporting terrorism or people trafficking creates potential compliance gaps (applies to litigation and dispute resolution firms, family law practices).
• Inadequate Monitoring of Multi-Jurisdictional Trusts or Companies: Lawyers advising on or managing trusts and companies spanning multiple jurisdictions without robust oversight risk enabling fund layering across borders (applies to trust and estate lawyers, corporate lawyers).

 

 

Delivery Method Risks and Lawyers’ AML Compliance

Some of the delivery method-related ML/TF risks relevant to lawyers’ anti-money laundering compliance include:

• Insufficient Verification for Non-Face-to-Face Onboarding: Lack of mechanisms to adequately link identification documents to the individual when onboarding remotely increases risks of impersonation or fraudulent representation (corporate lawyers and firms, family law practices).
• Weak Controls Over Use of Intermediaries or Gatekeepers: Lack of verification measures for intermediaries or gatekeepers acting on behalf of clients may obscure beneficial ownership and the true source of funds (trust and estate lawyers, real estate lawyers and conveyancing specialists).
• Lack of Oversight for International Client Onboarding: Providing services to clients across jurisdictions without thorough checks on compliance with local AML/CFT standards increases vulnerabilities to jurisdictional ML/TF risks (corporate lawyers and firms, intellectual property firms).
• Risks in Digital Document Handling and Signing: Absence of measures to authenticate digital signatures and documents used in legal transactions creates opportunities for fraud and manipulation (litigation and dispute resolution firms, real estate lawyers and conveyancing specialists).
• Challenges in Monitoring Digital Payments or Retainers: Weak controls for identifying the source of digital payments or retainers, particularly for cross-border transactions, can facilitate fund layering or integration (trust and estate lawyers, corporate lawyers and firms).

 

 

Customer Type Risks and Lawyers’ AML Compliance

Some of the customer type-related ML/TF risks relevant to law firms’ money laundering prevention include:

• Failure to Identify Beneficial Ownership in Corporate Clients: Inadequate controls for identifying and verifying beneficial owners of companies using legal services to establish complex or offshore structures (applies to corporate lawyers and trust and estate lawyers).
• Weak Scrutiny of High-Risk Occupations and Clients: Insufficient assessment of clients in occupations or sectors vulnerable to ML/TF risks, such as real estate investors, gambling operators (applies to corporate lawyers and real estate lawyers).
• Lack of Controls Over Non-Resident Clients: Limited risk categorisation and monitoring of non-resident clients, especially those operating from higher ML/TF risk jurisdictions (applies to all legal service types).
• Overreliance on Client-Provided Information: Dependence on unverified information from clients during onboarding and ongoing engagements (applies to all legal service types).
• Clients Using Intermediaries to Obscure Transactions: Failure to identify the ultimate client or purpose when working through intermediaries, such as agents or representatives (applies to corporate lawyers and litigation firms).

 

 

Institutional Risks and Lawyers’ AML Compliance

Some of the institutional ML/TF risks relevant to law firms’ anti-money laundering compliance include:

• Weak Collaboration with Other Gatekeepers: Lawyers working with accountants, corporate service providers, or tax advisors who lack robust AML controls may unknowingly facilitate ML/TF schemes through combined services (applies to corporate lawyers and trust and estate lawyers).
• Insufficient Monitoring of Funds Handled Through Trust Accounts: Lack of mechanisms to scrutinise the institutions or entities depositing funds into lawyers’ trust accounts can enable misuse for layering illicit funds, particularly when dealing with high-risk clients or intermediaries (applies to all lawyers operating trust accounts).
• Outsourcing AML Functions to Substandard Providers: Engaging third-party service providers or platforms with inadequate AML practices for outsourced compliance functions exposes law firms to regulatory breaches and undetected ML/TF risks (applies to corporate lawyers and real estate lawyers).

 

Standard Anti-Money Laundering Requirements for Law Firms

Law firms' AML obligations depend on their specific legal practice areas. The following list is not exhaustive:

• Conducting customer due diligence, including appropriate KYC checks: Ensuring verification of customers’ identities, as well as identities of beneficial owners of customers that are legal entities.
• Conducting transaction monitoring:  Monitoring deposits, withdrawals, and other transactions to identify and report suspicious transactions and patterns. However, this largely depends on the nature of legal services and local AML/CFT obligations.
• ODD requirements: Conducting ongoing customer due diligence, which is generally based on the customers' ML/TF risk profiles and ML/TF risk categories, as well as changes in their activities, behaviours, or risk factors.
• Staff Vetting: Performing comprehensive background checks and ongoing vetting of staff to maintain high standards of integrity and awareness.
• Reporting Certain Non-Suspicious Transactions: Obligation to report cross-border or cash transactions over a certain threshold, as per the local AML/CFT regulations, in a timely manner. However, if the transaction is processed through a local bank or another reporting entity, reporting requirements may depend on the local AML/CFT regulatory interpretation.
• Compliance with the regulatory obligations: Including registering with your local AML/CTF supervisor, appointing an AML/CTF officer or an MLRO, answering requests for information from the police, regulators and your AML/CTF supervisor, filing an annual report and more.
• Regular Staff Training: Providing continuous training to ensure employees are aware of AML/CFT protocols and can recognise red flags.
• Timely Reporting of Suspicious Transactions: Ensuring that suspicious transactions and activities are reported to the relevant authority (either your local AML/CFT supervisor or a financial intelligence unit (FIU)) within the required deadlines.
• ML/TF Risk Assessments: Conducting regular assessments of ML/TF risks faced by your business is a part of AML risk management for law firms.
• Independent AML/CFT Audits and Law firms: Organising periodic independent reviews of the AML/CFT program, other core documents, and components of your AML/CFT framework to assess their existence, compliance, application, and, where applicable, effectiveness, depending on local AML/CFT audit guidance.
• Applying EDD measures: Conducting enhanced due diligence on certain customers and certain transaction types.
• Establishing Clear AML/CFT Policies and Procedures: Creating documented guidelines for staff to follow.
• Monitoring PEPs and Sanctioned Entities: Implementing measures for additional scrutiny of politically exposed persons and entities on sanction lists.
• Screening Against Watchlists: Regular checks of clients against domestic and international watchlists.
• Ensuring Proper Record-Keeping: Maintaining detailed and accurate records of client information and transactions in compliance with AML/CFT regulations.

 

Common Lawyers’ AML/CFT Issues

This is not an exhaustive list and could include:

During Customer Onboarding

• Failure to Meet AML/CTF Standards for Beneficial Ownership Verification: Weak controls for verifying the ultimate beneficial owners of corporate clients or trusts to the required AML/CTF standard may create vulnerabilities for ML/TF activities. (applies to corporate lawyers and trust and estate lawyers)
• Inadequate Enhanced Due Diligence (EDD) for High-Risk Clients: Weak EDD measures for politically exposed persons (PEPs) or clients operating in high-risk jurisdictions can result in missed red flags during onboarding (applies to all law firms).
• Acceptance of Unverified Client Information: Overreliance on self-declared information from clients without additional verification, particularly for complex legal arrangements or international clients, may obscure potential ML/TF risks (applies to litigation and dispute resolution firms).
• Insufficient Scrutiny of Non-Resident Clients: Failure to conduct thorough due diligence on non-resident clients seeking services for cross-border transactions or property deals could expose law firms to international ML risks (applies to real estate lawyers and conveyancing specialists).

 

After Customer Onboarding

• Failure to Detect Anomalous Transactions in Trust Accounts: Lack of effective mechanisms to identify unusual fund movements or third-party payments unrelated to legal services creates blind spots in identifying ML/TF risks (applies to all law firms managing trust accounts).
• Neglect of Ongoing KYC Updates: Insufficient measures to refresh client due diligence as circumstances change, such as shifts in ownership structures or new high-risk indicators, may leave firms unaware of emerging risks (applies to corporate lawyers and family law practices).
• Inadequate Reporting of Suspicious Activities: Lawyers failing to detect or report suspicious activities linked to client accounts or transactions due to insufficient AML/CFT training or awareness may miss critical obligations (applies to all law firms).

 

Common AML/CTF Red Flags for Law Firms

The Financial Action Task Force (FATF) and various national AML/CTF supervisors outline the following non-exhaustive list of ML/TF red flags for law firms:

• Use of Legal Structures to Obscure Ownership: Advising on or facilitating the creation of complex legal entities, trusts, or offshore structures that conceal the ultimate beneficial owner.
• Anomalous Client Instructions: Receiving instructions that deviate significantly from standard legal practices or the client’s known profile, such as unusual urgency in transactions or requests to avoid typical documentation.
• Opaque Trust Transactions: Establishing or managing trusts with beneficiaries or trustees that cannot be clearly identified or justified, raising concerns about potential misuse for money laundering.
• Unusual Property Transactions: Handling real estate purchases funded by large cash payments, opaque funding sources, or routed through high-risk jurisdictions without economic rationale.
• Third-Party Payments Without Justification: Accepting payments or managing transactions involving third parties not directly related to the client or transaction without clear documentation of their role.
• Rapid Creation or Dissolution of Entities: Involvement in establishing or winding down multiple legal entities within short periods, particularly in cross-border contexts, without clear business purposes.
• Use of Client Accounts for Non-Legal Purposes: Handling funds in client accounts unrelated to legal services, such as payments for personal expenses or transactions with high-risk jurisdictions.
• Resistance to Providing Information: Clients who hesitate or refuse to provide necessary details about the source of funds, the nature of the transaction, or the purpose of legal services.
• Engagements with Politically Exposed Persons (PEPs): Providing services to PEPs or their associates without applying enhanced due diligence measures, particularly for cross-border transactions.
• Transactions Involving High-Risk Jurisdictions: Handling funds or providing services connected to jurisdictions with weak AML/CFT controls, high levels of corruption, or sanctioned entities.
• Complex Financial Arrangements: Structuring transactions that involve multiple layers, intermediaries, or jurisdictions without a clear legal or economic purpose.
• Frequent Changes in Corporate or Trust Structures: Advising on repeated modifications to corporate or trust arrangements without transparent business or legal justification.