As mentioned in our previous post: "FICA to FICAA” an important component of the Financial Intelligence Centre Amendment Act 1 of 2017 (FICAA) is the establishment of taking a risk-based approach when doing due diligence on clients. The purpose of this risk-based approach is to allow organisations to make better use of their resources by focusing attention where there is higher risk.
Identification of the money laundering risks and terrorist financing risks associated with certain clients or categories of clients, and certain types of work will allow you to reasonably and proportionately determine, implement, measure and control how to mitigate these risks.
The services of legal practitioners are varied and whilst product and service alone would not necessarily result in a client being assessed as higher risk, it should be considered as a part of the overall risk assessment.
Certain products and services are more susceptible to money laundering or terrorist financing, such as:
Products / services that facilitate complex structures or a high degree of anonymity such as setting up complex company structures
Products / services that involve high value assets such as the sale or purchase of property
Products / services that allow ‘anonymous funding’ such as asset or litigation payments by an unrelated third party
Products / services that facilitate international transactions, particularly to high risk jurisdictions
Whatever the situation, it is important to consider all the available relevant information to reasonably determine whether any cause for suspicion exists. This could include deliberating whether any amounts paid or received reasonably reflects the true value of the asset, whether funds could realistically have been generated or earned under lawful conditions, whether any third parties appear legitimate and/or if any cross-border activity is occurring under lawful conditions.
At DocFox we understand that each law firm has their own unique services and therefore unique risk-based approaches. Based on this, we have created an offering called FICA in-a-Box for law firms.