The Legal Sector Affinity Group (LSAG) publishes anti-money laundering (AML) guidance for firms each time regulations update, most recently in January 2021. Although the document is easy to read and well structured, it is still over 200 pages of guidance. So we’ve broken down a few of the key points for you below. And there’s good news for Amiqus clients; the Amiqus platform makes it much easier to follow the new guidance.
The 2021 LSAG AML guidance is based on 36 core principles. There was a lot of focus on:
- Vetting staff and beneficial owners, officers and managers (BOOMs)
- Firm wide risk assessments
- The need for enhanced due diligence (EDD)
- Source of funds and wealth checking
- Process documentation
- Electronic identity checking
That’s right, the new guidance includes a whole section (section 7) focused on electronic identity and verification (EID&V) services such as Amiqus. It’s no surprise that this is the case after a year of remote working and Amiqus excels at meeting their recommendations.
Let’s dive into the guidance. If you need a refresher on any of the acronyms, we’ve included a handy guide at the bottom of this article.
AML checking staff and BOOMs
The guidance suggests:
- Verifying the identities of BOOMs and checking for convictions of any of the offences under schedule 3 of the regulations
- Screening frontline AML staff both pre-employment and during employment
- This screening may include criminal record checks, credit checks, adverse media checks, reference checking and electronic identity verification
How Amiqus can help you with this:
- You can run criminal record checks (Disclosure and DBS), photo ID checks and both identity reports and document transfers for proof of address through Amiqus to both verify the identity of BOOMs and check for convictions
- For AML frontline staff vetting you can additionally run credit reports, screening for politically exposed persons (PEPs), sanctions and adverse media, as well as pre-employment information and reference gathering
- You can set up a secondary Amiqus account with separate user access to keep staff data separate from client data at no extra cost
Risk assessment on clients and firm wide
The guidance suggests:
- Conducting risk assessments on all new clients and matters.
- Completing a firm wide risk assessment (PWRA).
How Amiqus can help you with this:
- You can carry out a client’s risk assessment on their file within Amiqus. So risk assessments can be completed alongside CDD information and stored in the same place, all on the same date and time stamped audit trail.
- Amiqus helps with writing firm wide risk assessments by making the design, documentation and implementation of your processes easier
Customer and enhanced due diligence (CDD/EDD)
The guidance suggests:
- Conducting CDD on all new clients
- Regularly reviewing CDD, and where risk appropriate regularly updating it
- Applying ongoing monitoring where appropriate to risk level
- Establishing procedures to identify PEPs
- Applying EDD and ongoing monitoring to all high risk clients
- Considering reliance on another firm’s CDD as a risk factor
How Amiqus can help you with this:
- Using Amiqus, you can complete customisable international photo ID verification and watchlist checks (for PEPs, sanctions and adverse media screening), as well as UK-only identity report and banking information checks; this enables the highest level of CDD/EDD
- The new requirement to complete full KYC checks on all clients is quick and simple to implement through Amiqus.
- This reduces any need for another firm’s CDD, reduces your risk and makes it simple to renew CDD/EDD on a client when needed
- Our watchlist check’s ‘ongoing monitoring’ option automatically rescans PEPs, sanctions and adverse media databases every day; it’s a powerful tool for keeping CDD/EDD information up to date and identifying high risk clients
Source of funds and source of wealth checking
The guidance suggests:
- It’s good practice to check source of funds (even if the matter is an occasional transaction)
- Bank statements and other relevant documentation are useful for establishing source of funds or source of wealth
- Ensuring you establish the reason or provenance for funds
- Conducting source of funds and source of wealth checks on PEPs or as part of EDD; it also considers these checks good practice as part of holistic CDD in general
How Amiqus can help you with this:
- You can gather and verify bank account information and transaction history securely using our banking information check
- Banking information is provided in an electronic format so it’s even filterable by transaction type and amount
- Our custom forms and document request features mean you can establish a given reason for funds and combined with the banking information check offer strong support for source of funds/wealth investigation
Documenting processes, writing clear policies, reporting obligations and auditing
The guidance suggests:
- That you are able to demonstrate your risk assessment and CDD processes as relates to any client or matter (‘if in doubt, write it down’)
- Documenting your policies, controls and procedures (PCPs), and records/audit trails demonstrating compliance with these PCPs
- Maintaining and retaining accurate, comprehensive records to help meet your reporting obligations and any compliance with law enforcement
How Amiqus can help you with this:
- Amiqus is easy to use, reducing risk of user error and data is stored securely in a clear format
- This enables accurate, consistent conduction, documentation and evidencing of your AML processes and CDD
- It also helps you write clear policies, controls and procedures (PCPs)
- We make your audits simpler and faster; all changes to clients’ files and custom notes are stored on a dated and time stamped audit trail called an activity log.
- Auditors can also be added as read only users, meaning client data can be kept secure within Amiqus’ double encrypted system
- This will also help you to meet reporting obligations or comply with law enforcement
Electronic identity and verification services
The guidance suggests:
- Ensuring both positive and negative sources of information are used
- That results are transparent and easy to understand so that you can accurately make risk based decisions
- Accessible training resources are available for staff
- Checks are customisable to increase stringency with risk
- Data can be analysed and ‘dip sampled’ for reliability and consistency
How Amiqus can help you with this:
- Amiqus meets all of this guidance and in many cases exceeds the recommendations
- Combining Amiqus checks allows you to verify identities at the highest level (AV3A) of the UK government’s framework for electronic identification
Hopefully this shines some light on how Amiqus can help with meeting the guidance suggestions but it doesn’t mention the best part: Amiqus is a living solution to your compliance needs. This means we are always improving our product to better support you and align with new guidance.
If you have questions about how Amiqus can help you to follow the LSAG guidance you can join one of our free AML training webinars and ask us in a live Q+A session.
Reference
Acronym-weary? Here’s our handy guide:
LSAG – Legal Sector Affinity Group
AML – anti-money laundering
BOOM – beneficial owner, officer, or manager
CDD/EDD – customer/enhanced due diligence
EID&V – electronic identity and verification
PEP – politically exposed person
PWRA – practice wide risk assessment
KYC – know your client/customer
PCPs – policies, controls and procedures
