Is your law firm ready for the Fifth EU Money Laundering Directive (5MLD) which comes into force at the end of this week (Friday 10th January)?
The regulations are an update on the Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and now scrutinises the digital world more closely with cryptocurrency exchange platforms becoming accountable and the use of electronic verification getting the regulatory thumbs up.
The regulations offer an entire section to technology as a way of stemming the flow of illicit funds and encourages more firms to embrace electronic verification to help in the fight against money laundering.
The (5MLD) regulations state:
“(19) Information may be regarded as obtained from a reliable source which is independent of the person whose identity is being verified where […]
“(a) it is obtained by means of an electronic identification process, including by using electronic identification means or by using a trust service (within the meanings of those terms in Regulation
(EU) No 910/2014 of the European Parliament and of the Council of 23rd July 2014 on electronic identification and trust services for electronic transactions in the internal market(11)); and…
“b) that process is secure from fraud and misuse and capable of providing an appropriate level of assurance that the person claiming a particular identity is in fact the person with that identity.”
Electronic verification has been viewed as important technology for property stakeholders to utilise within the proptech community in 2019 with Alex Chesterman, founder of Zoopla, nominating Thirdfort, an online ID and Source of Funds solution, as the best start-up technology of last year.
The app uses state of the art facial recognition to identify potential clients in the home buying and selling process.
Additionally, it helps onboard clients quickly and easily whilst also allowing consumers to complete their ID and source of funds checks in their own time.
Alex Chesterman informed The Times:
“The process of buying or selling a home hasn’t changed for decades and carries increased risks for lawyers around compliance and for consumers around fraud. Thirdfort tackles this with a mobile app, empowering lawyers to carry out checks with no need for physical documents.”
Martin Cheek, Managing Director of SmartSearch, commented:
“The Fifth Money Laundering Regulations coming into law may well catch a number of people by surprise, happening, as it has, so close to Christmas. It comes into effect on the 10th January, so companies will not have long to prepare.
“It is the need for electronic verification that is likely to take most people by surprise. Any estate agency or letting agents who do not already have a trusted means of doing this will need to implement this immediately to ensure they are compliant and save themselves from a heavy fine.
“The regulations are designed to help tackle rising levels of fraud and eliminate money laundering, things that are likely to be a key priority for everyone this year.”
How will electronic verification help the conveyancing sector? Is your law firm preparing to increase its use of electronic verification technology?
One Response
I have followed Thirdfort since its early days
Its founders were inspired when a friend lost money through a scam on solicitors
All professionals who have seen the stress that fraud can cause to individual clients should be encouraged to work together to mitigate its consequences