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Lawyers and conveyancers are becoming worse at verifying the identities of their clients and checking sanctions lists as part of due diligence, according to new research.
In fact, the undertaking of such searches is becoming much more infrequent.
Only 2 per cent of professionals are searching sanctions lists, and just 12 per cent undertaking Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) searches, the survey found. This is compared to 18 per cent and 28 per cent, respectively, in 2016.
Further, only 12 per cent are looking up international companies and just 2 per cent are checking for “politically exposed” persons, in a striking contrast to the 40 per cent and 16 per cent respectively from 2016.
“Conveyancers and lawyers are not convinced that the current regime is effective in deterring AML/CTF activity and believe more needs to be done,” according to InfoTrack chief executive John Ahern.
The survey’s findings were clear in demonstrating the need to undertake proper checks, however, with 15 per cent of professionals uncovering fraudulent or criminal behaviour while carrying out due diligence.
The imperative of searches was especially pertinent in the context of cryptocurrencies, with 56 per cent believing new currencies, such as bitcoin, to be key tools for money laundering.
“Any business can be the target of money laundering and terrorism financing,” Mr Ahern explained.
“[These events] are placing pressure on the government to expand the regime as a matter of priority.”
Encouragingly, there was a slight uptick in ‘know your client’ searches, at 47 per cent compared to 44 per cent two years ago.
But 82 per cent of survey respondents believe Australian directors are not fully aware of their duties under the AML/CTF Act.
“The Aussie mantra of ‘she’ll be right mate’, combined with the inclination to do the minimum required, could lead to disaster,” Mr Ahern said.
“Organisations, big and small, need to be on guard against these threats and be able to demonstrate they’ve put sufficient procedures in place.
“Conveyancers and lawyers need to get on top of the requirements of this act now,” he concluded.
Jerome Doraisamy is the managing editor of Lawyers Weekly and HR Leader. He is also the author of The Wellness Doctrines book series, an admitted solicitor in New South Wales, and a board director of the Minds Count Foundation.
You can email Jerome at:
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Jerome Doraisamy
