Regulatory compliance and remote training

Client intake:

The dangers of tick box compliance and remote training in legal firms 

Regulatory compliance and remote training

Regulatory compliance is the cornerstone of every law firm and its practitioners. The case of Yevgeny Prigozhin serves as a powerful reminder of this when he managed to pass an anti-money laundering check at a British law firm by providing a utility bill under his elderly mother’s name.

Failing to meet its obligations carries significant consequences. Hefty fines, loss of insurance coverage, irreparable harm to reputation, and, in the worst cases, potential closure are among the risks they face. However, it’s the lawyers themselves who are personally accountable.  

Deskilling lawyers through modules and tick boxes 

Global firms trying to create a consistent approach to compliance across different continents are turning to remote onboarding. This means introducing new processes and training lawyers to follow a centralised and unified approach. On the surface, remote compliance training might seem like a good idea, as it ensures lawyers are following a consistent approach and best practices. 

But let’s consider how compliance training usually unfolds. Many firms rely on pre-packaged compliance training modules which are often generic. To make matters worse, they’re sometimes supplied by a third-party provider who doesn’t grasp the kind of work the firm usually deals with.

Another challenge with online compliance training is actively engaging lawyers. With remote delivery, there’s no way to monitor their participation. When they fail to actively engage with the material, it can result in a limited understanding when it comes to applying it in real-world situations. This can lead to complacency, where they assume checking off boxes is enough. 

Tick box compliance is a term used to describe a checkbox-style approach to regulatory compliance. It involves simply checking off boxes to indicate that certain regulatory requirements have been met, without any real effort to understand or address the underlying issues.  

Losing curiosity about what customer due diligence means 

“Where big law has moved towards centralised onboarding, what you’re actually seeing is an increasingly deskilled cohort of lawyers who have a really remote understanding of the realities of what CDD is, beyond the mere tick box.”

Julie Norris, Partner at Kingsley Napley. 

The most significant risk associated with tick box regulatory compliance is not truly knowing the client. Effective customer due diligence demands genuine curiosity in and understanding of the client. If lawyers just tick boxes without engaging with the client, can they truly claim to know them? And if they lack this understanding, how will they recognise any anomalies in the client’s behaviour, which could signify potential risks? 

This was discussed in our recent webinar with Andrew Cheung, General Counsel at Pinsent Masons, and The Law Society. Andrew stated, “People just see the process and they stop seeing the risk.” 

The same concern resurfaced during a recent Law Society Gazette roundtable last month. The discussion centred on how remote compliance training contributes to a lack of awareness in terms of customer due diligence and understanding of when to look at the real risks. 

While we tend to search for information about others online, this curiosity often lacks when it comes to clients. It could be because fee-earners don’t see the importance of it beyond their immediate legal needs or it may be driven by the pressure to bill clients for their time.  

It also ties back to how compliance training is conducted, and whether it improves how lawyers’ approach their work. As they get used to a routine of checking boxes and meeting obligations, their focus drifts away from the practical impact and the importance of knowing their clients.  

Automate research to focus on the risk, not the process 

We’ve talked about why remote compliance training can influence lawyers’ approach to customer due diligence, and how a routine of checking boxes and fulfilling obligations can lead to process overwhelm, but the question still remains: what’s the solution? 

Enter AI-powered research platforms, like Xapien. By taking charge of the research and information gathering process, Xapien enables lawyers to shift their focus from the data collection process to gaining a comprehensive understanding of their clients. For firms, this means less training practitioners on following checklists and processes, and more on what they’re good at: spotting, assessing and mitigating the risk. 

Using its powerful AI technology, Xapien enables compliance professionals to go beyond checking “tick box” style data from existing datasets such as PEPs and sanctions lists, and corporate records. It searches the entire indexed web, surfacing potential risks in a user-friendly and intuitive way, which enables lawyers to gain a fuller view of their clients in a matter of minutes.  

With the research clearly presented like this, lawyers can dedicate more time to getting to know their clients based on a strong understanding of their background and business. And more importantly, being able to spot any abnormal behavioural cues that may arise.  

Interested in how AI can streamline your client onboarding process? Check out this blog. And if you’re exploring your options, read our guide to the seven best legal client onboarding software.

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