Fraud, money laundering, and sanctions prompt global regulators to increase scrutiny of law firms

Legal firms are under intense global regulatory pressure, as governments worldwide start to treat them more like financial services firms. For compliance managers, that means they should focus on integrated data and financial systems, global identity verification capabilities, and employee/partner training and oversight to protect their firms from crime and regulatory penalties.

The legal sector faces unprecedented regulatory scrutiny amid mounting recognition of the profession’s vulnerability to financial crime, according to Katarina Pranjic, head of regulation and policy at LexisNexis Risk Solutions. Law firms are particularly vulnerable to being used as vehicles for money laundering. “Attorney-client privilege can shield suspicious activities from scrutiny, while the sector’s fragmented nature often results in inconsistent compliance standards,” she says. “Legal professionals hold unique positions as custodians of high-value property transactions, client funds, cross-border corporate formations and complex trust arrangements – all avenues criminal networks can use to legitimize illicit proceeds of crime.”