LawtechUK has today issued a joint statement along with its affiliated Regulatory Response Unit to encourage the legal sector to adopt Digital IDs – which help stamp out money laundering and speed up KYC processes – but are still viewed with some doubts by lawyers.
‘One often cited barrier to adopting digital ID tools is that to do so would put the user in breach of their obligation not to outsource their Anti-Money Laundering responsibilities,’ they explained.
However, they added that while it is correct that a legal professional cannot outsource their responsibility, this does not stop the use of digital ID tools in providing the checks that are expected of them. I.e. this is exactly what you should be doing, rather than avoiding.
‘When used correctly, digital ID verification can provide a fast, cost-effective, and reliable way to verify an individual’s identity and reduce money laundering and compliance risks. It can make it easier to spot fake documents for example, make the client onboarding process faster and smoother, and support the legal community to keep pace with changes in international economic sanctions,’ they added.
Jenifer Swallow, Director of LawtechUK said: ‘The joint statement sets out to erase the lingering myth that legal services regulation prevents the use or reliance on digital means of identity verification in law. Responsible selection, adoption and implementation of these tools can help improve compliance practices and client service across the legal sector.
‘Digital identity technology has become a valuable tool in combating money laundering risk across industries worldwide. It is critical that the legal community keeps up with advancements in technology and focuses on how they can be best used for the benefit of their clients and wider society – it is great to see the regulators working together to support this.’
The benefits of digital IDs are explained here:
- ‘Identity information may be submitted digitally, and/or collected via an information store and checked against numerous online databases in real-time. It is automatically encrypted and stored in secure digital form.
- The technology also helps to screen out synthetic identities used by imposters.
- Documents are validated using cryptographic techniques, character recognition, digital signature and Machine Readable Zone (MRZ) checks of multiple document security features.
- Validation through the tool is consistent in accuracy, with attributes and data points automatically corroborated in real-time against numerous third-party databases.
- Automated checks can be easily conducted against databases of known stolen documents, as well as fraudulent and synthetic identities.
- A combination of static images and live video are captured either remotely or in person.
- Physical features and information from official identity documents are used to perform an advanced biometric comparison.
- Results are provided in real-time, automatically taking into account risk factors in relation to fraudulent identity, digital tampering and suspect lighting conditions.’
In short, they provide a wide range of efficiency and risk reduction benefits that synch with the digital world that we already exist within. Moreover, it’s not something that you have to do all by yourself, as there are several companies that provide services here, e.g. Thirdfort.
‘We see that the law firms that use Digital ID technology (and alongside it, ongoing risk monitoring and other top in class AML tools), have driven far more certainty and effectiveness in their AML compliance operations. Firms have also noted the ancillary benefits – the ability for clients to benefit from the same modern, digital experience that they have come to expect from other industries like banking,’ concluded Julia Salasky, CEO of legal tech company Legl.