Building AML Framework for a Legal Firm
Building AML Framework for a Legal Firm
AML UAE assessed the regulatory requirements and built an effective Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) framework for a legal firm based in UAE. Our client is a leading legal firm providing legal services across various areas.
The UAE’s AML regulatory framework requires legal firms to implement efficient AML/CFT measures. For this purpose, the client approached AML UAE to help them build an AML/CFT framework that incorporates and implements effective AML measures aligned with the regulatory framework.
Customer Goals:
As the client was struggling with building the AML framework, our client had the following aims:
- To develop a robust AML framework that is tailored to the specific needs and requirements of the legal firm.
- To adopt an AML framework that can be tailored according to the evolving AML regulations as well as exposure of ML, FT, and PF risks to legal firms.
- To achieve transparency and effectiveness in the AML measures implemented to mitigate financial risks, including ML, FT, and PF.
Challenges:
The complexity of AML/CFT laws and regulations posed a significant challenge for the client. The client struggled with:
- Developing a Tailored AML Framework: The client lacked the specialised knowledge needed to build an AML framework that not only met compliance standards but also addressed the unique ML, FT, and PF risks specific to the legal sector.
- Adapting to Evolving Risks: With financial crimes evolving and regulatory scrutiny increasing, the client found it challenging to keep their AML measures up-to-date and effective against emerging threats.
Thus, recognising these challenges, the client highlighted the need for AML experts to develop a framework that would help it maintain compliance requirements, integrity, and trust within the legal industry.
Legal Background:
The legal firm is governed by the following regulations:
- Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations
- Federal Decree Law No (26) of 2021 to amend certain provisions of Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations
- Cabinet Decision No (10) of 2019 concerning the Executive Regulations of Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations
- Guidelines for Designated Non-Financial Businesses and Professions (DNFBPs)
- Lawyers’ Guide on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations
- Ministerial Decision No. (533) of 2019 On Anti-Money Laundering and Combating Terrorism Financing related to Lawyers, Notaries and Legal Independent Professionals
At present, the AML regulatory framework in the UAE includes lawyers within the businesses and professions that are considered Designated Non-Financial Businesses and Professions (DNFBPs), mandating all legal firms in the UAE to comply with the regulatory framework governing AML/CFT compliance.
As part of the AML regulatory requirement, legal firms need to draft and implement an AML framework that covers internal policies, procedures, control measures, and compliance requirements.
Solution Provided by AML UAE Team:
AML UAE helped the client and provided a comprehensive approach for building and framing an effective AML framework. Our strategy focused on understanding the company’s existing AML framework policies and procedures and optimising them to ensure efficiency and cost-effectiveness.
Here’s how we assisted the legal firm:
- Examined the compliance requirements under the AML regulatory framework for legal firms in the UAE and dug into specific challenges and risks faced by legal firms in combating ML/FT.
- Conducted risk assessment to identify and assess ML/FT and PF in line with National Risk Assessment (NRA) and Sectoral Risk Assessment that highlight the risk factors legal firms encounter in their business lines and services.
- Aided the client in adopting a risk-based approach for the AML framework instead of a tick-based approach.
- Documented advanced AML policies, procedures, and control measures based on the client’s risk appetite and aligning with the compliance requirements, including Know Your Customer (KYC), Customer Due Diligence, Ongoing Monitoring, and Reporting Obligations.
- Undertaken AML/CFT training to improve the overall skill set of employees and AML compliance officer, ensuring AML/CFT measures are implemented in the best possible way.
- Helped with the implementation of AML software to achieve efficiency of the AML framework.
Our approach enabled the client to adopt an AML framework that is capable of addressing various compliance requirements and effectively mitigating ML, FT, and PF risks.
End Result:
Our collaboration with the client resulted in the successful building and development of an AML framework, incorporating best practices and regulatory requirements for legal firms. With the AML/CFT framework, the client significantly enhanced its capability to comply with the AML regulations, thereby mitigating the legal firm’s exposure to ML, FT, and PF risks.
Key outcomes of our efforts included:
- Compliance optimisation by identifying and addressing areas where the client was under-compliant/over-compliant and helped the client become compliant across relevant areas.
- Through effective AML measures and the implementation of AML technologies, the client improved efficiency in compliance requirements by 75% and operational effectiveness by 60%.
- Additionally, with AML/CFT training by AML UAE, employees and compliance officers became more diligent about fulfilling their legal obligations.
- It resulted in enhanced AML compliance capabilities, thereby reinforcing the reputation and credibility of compliant professionals in the legal industry.
AML UAE’s partnership with the legal firm resulted in a transformative improvement, addressing the client’s goals and aligning with UAE’s regulatory requirements and evolving financial risks. The customised AML/CFT framework developed by AML UAE demonstrated how a well-designed AML framework can greatly benefit businesses in managing AML compliance and undertaking mitigating measures.
Share via :