A Client Due Diligence Tool allows UK law firms to rapidly collate all information necessary to assess the potential risks of a business relationship with a prospective or existing client. This is often a costly and time-consuming process for law firms as practice groups must navigate through lengthy internal processes and policies, losing valuable time and revenue. Using the tool, users are able to quickly evaluate both new and existing clients through the entire CDD process including: (a) determining whether Simplified Due Diligence (SDD) or Enhanced Due Diligence (EDD) is required; (b) identity verification; and (c) issuing an automated written report and escalating any red flags. All verification efforts are documented in a full audit trail. If desired, a report and dashboard is generated to monitor key factors such as risk type, transaction value or geographic location.
In the UK, law firms are required to carry out client due diligence checks (CDD) when establishing a business relationship or entering into a high value occasional transaction with a client in order to comply with The Money Laundering Regulations 2017. The Law Society of England and Wales has in turn detailed what this legislation means for law firms in detailed guidance – which details the Client Due Diligence process and checks law firms are expected to carry out on their clients and transactions in order to comply with this legislation.
With a CDD Tool, this process is automated, with the tool assessing prospective clients and the proposed transaction against various data sources such as sanctions lists. The user is guided through an interactive questionnaire, based on which the information necessary for performing all key CDD functions is gathered. If specific scenarios require it, the legal department can be automatically notified, and an approval workflow can be triggered.
How it works
Through a customizable, user-friendly and interactive questionnaire, all relevant information about the prospective client and the matter is collected and processed. The tool is then able to assess a client’s background, verify their identity and establish the risk of the matter. The application can also be connected to external databases to include specific searches and checks. rn
A risk profile is generated from the initial assessment, flagging certain activities or persons for their respective risks and then either providing recommendations for mitigation or built into escalation processes such as internal approvals and handovers.
A dashboard allows a law firm to monitor and document all CDD checks and create meaningful dashboards based on this data. This helps to hold end users accountable and offers metrics on overall risk reduction.