Is your employee screening process compliant with the new AML and Right to work requirements

From October 1st 2022, all UK employers, including law firms, must use a government certified ‘identity service provider’ (IDSP) to digitally verify employee right to work statuses or go back to physically checking their new hires’ documents in person. 

We are delighted to inform you that Amiqus is now a UK government certified identity service provider’ (IDSP) which means that your client AML and compliance platform can also be used to screen new employees and comply with LSAG anti-money laundering guidance regarding appropriate staff vetting. 

Summary

This briefing is prepared to help legal professionals and firms comply with their money laundering regulations (MLRs) with respect to screening AML staff and BOOMs with the help of the government-certified IDSPs.

The briefing specifically explores four key updates. The first relates to the LSAG guidance issued last year, which has now been approved by HM Treasury and what this means in practical terms.

Second, also linked to the LSAG guidance, we look at notable changes to the previously published version by looking at sections 7.9, 7.13 and 9.4 where a particular focus is given to the use of technologies relevant to AML control in legal practices including conducting employee screening.

The third update concerns regulation 21 within the same document, which reiterates the importance of Internal controls and carrying out screening of relevant employees (prior to and) during the course of their appointment.

Finally, and linked to all the above, we look at the benefits of engaging with Amiqus as a certified IDSP, to assist with carrying out the digital identity verification aspect of a right to work check for current and prospective employees.

HM Treasury approval for UK AML guidance for the legal sector

The latest LSAG guidance issued in 2021 has recently received HM Treasury approval, meaning it now has full standing under the MLRs, specifically under regulation 86(2)(b)(ii). To elaborate, this requires the court to consider if the guidance has been followed when judging whether a legal practitioner or practice has committed a criminal offence under the MLRs. 

Use of technology to conduct employee screening

The document now has an expanded section on the use of technology to verify the identities of employees and any beneficial owner, officer or manager (BOOMs) at the firm. It further advises the firm to use electronic identification & verification (EID&V) tools to screen employees, and check their names against PEP, sanctions and adverse media. This section highlights that the screening of relevant employees is a requirement and firms are required to assess the ‘conduct and integrity’ of an individual both before and during their employment.

Firm’s obligations regarding Right to work check

One of the key changes in the guidance is the requirement to have a policy and carry out checks on your “frontline AML staff”, as well as beneficial owners, officers and managers of the firm (BOOMs). Subsequently, ‘regulation 21’ of the guidance sets out a number of internal controls which firms are required to adopt in which one refers to screening of relevant employees – both at the pre-employment stage and on an ongoing basis. In this case, relevant employees will include the MLCO, MLRO (nominated officer) and specialist compliance staff, however, may also extend to other partners and staff responsible for risk assessments, client due diligence or other AML related activities.

“Employee screening is an important control in mitigating potential AML risks to your business when onboarding new employees or partners – and on an ongoing basis. The extent to which you undertake these checks will depend on the size and nature of the business, and can include background, verification of identity and right-to-work checks, along with importantly ensuring they have the skills, knowledge and experience to undertake their AML responsibilities.”

Graham Mackenzie, Head of AML at Law Society of Scotland

In addition to the above, the new regulation has also changed some elements of the ‘right to work check scheme’, which puts an additional obligation on firms to check the status of prospective employees, in order to ensure whether they have the right to work in the UK. The right to work system applies to all employees above the age of 16, who are physically working in the UK under a contract of employment, regardless of whether the agreement is express or implied, oral or written.

What are the penalties?

Getting it wrong, by failing to meet the requirements that prove the right to work i.e. not completing the proper checks and retaining the records, could result in firms being fined up to £20,000 per breach. As well as the financial loss, it can also lead to firms losing their sponsorship licences, forfeiting the right to employ migrant workers with a legitimate right to work in the UK, as well as suffering serious damage to their reputation.

How can Amiqus help?

As a government certified IDSP, we meet the levels of confidence required by the new digital schemes approved by the UK government. We encourage all legal practitioners and law firms to engage with Amiqus to set up their staff accounts as soon as possible to avoid penalties. Our staff vetting services are designed to mitigate risk during the hiring process and provide ongoing support throughout the employee lifecycle.

Today, legal firms are in the midst of an unprecedented battle for talent and therefore have no choice but to review their candidate onboarding experience with the same level of care as they do for their clients.

Many law firms still onboard staff using static, lengthy, manual forms. This makes it difficult to monitor, review applications and collect documents from prospective employees which, in turn, makes it harder to identify and resolve red flags. This is where Amiqus can save you time and money by turning hours of paperwork into minutes of secure online compliance checks. 

Furthermore, where a right to work check is conducted, it is essential to ensure that digital copies of all right to work check documentation are kept securely for the duration of the person’s employment and for a further two years once they cease employment with the organisation. Employers should also be able to produce these document copies quickly in the event that they are requested to show them to demonstrate that a right to work check has been performed and in order to retain a statutory excuse.  

At Amiqus, our secure digital database can be filtered, searched and exported along with any previous document uploads to highlight the key information that you need instantly.

“At Amiqus, our focus has always been on making sure our clients can achieve legal and regulatory compliance by offering an efficient and effective solution for onboarding clients and staff alike.

Our accreditation as a certified IDSP under the UK Trust Framework demonstrates our commitment and represents the gold standard of digital identity service provision with security and data privacy as a priority. This means that our clients can stay on the right side of compliance with secure processes for the handling and storage of sensitive data.”

Craig Wilson, Relationship Manager at Amiqus

If you’re interested in implementing an effective process for pre-employment and background screening with checks including Disclosure, employment history, credit reports and right-to-work verification contact [email protected] and a member of our team will get back to you. Please feel free to share this article with your HR team if you think this will be of interest to them.

Acronym guide
  • BOOMs – Beneficial Owner Officer or Manager
  • DCMS – Department for Digital, Culture, Media and Sport
  • EID&V – Electronic Identification & Verification
  • IDSP – Identity Service Providers
  • IDVT – Identity Verification Technology
  • MLCO – Money Laundering Compliance Officer
  • MLR – Money Laundering Regulations
  • MLRO – Money Laundering Reporting Officer
  • PEP – Politically Exposed Person
  • UKDIATF – UK Digital Identity and Attributes Trust Framework