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Client intake:

Where Xapien fits into the client onboarding process

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Nick Morgan, Head of Legal Professionals • March 28 2024

Risk is inherent for law firms in 2024. They face increasing regulatory pressure from AML and KYC obligations, which requires them to truly know their clients beyond ticking boxes. Moreover, there’s a business pressure to start billable work promptly. This results in firms trying to strike a balance between effective risk management and an efficient client onboarding process. 

Customer Due Diligence (CDD) is the most significant time drain, as it involves manual web searches and hours spent reading articles and other web content. 

Larger firms might choose to adopt a parallel approach to start fee-earning work sooner or outsource it to a third-party consultancy. Smaller firms may handle it manually, often resulting in a patchy and time-consuming process. In some cases, smaller firms may skimp on the depth of their due diligence simply due to resource constraints. 

The bottom line is due diligence slows business down Enter Xapien—an AI-powered tool that reduces manual research burden and enables a strategic approach. Xapien searches, analyses and summarises open-source information into a written report, similar to a human researcher. 

Read more: How law firms are starting billable work faster with Xapien

In this article, we’ll explain how law firms are using Xapien to streamline their KYC checks and client onboarding, so compliance and efficiency aren’t mutually exclusive goals. 

What CDD used to look like

Clients undergo KYC, but the firm rarely gains a comprehensive understanding of the client’s background, business activities, and potential red flags at the end of it. This type of knowledge requires in-depth research and analysis. However, compliance teams are overwhelmed with due diligence requests and often can’t afford the time for deep due diligence.

Read more: What law firms need to know about the SRA’s new guidance on client risk assessment

Most importantly, the time spent on due diligence can delay the commencement of billable work, impacting the firm’s profitability. Balancing due diligence with ongoing cases and client services can cause disruptions and inefficiencies in workflow. Firms that do attempt to conduct due diligence while also starting work risk having a rushed due diligence process. 

This could increase the likelihood of overlooking critical risk factors associated with a client. Insufficient or incomplete due diligence may result in non-compliance with AML and KYC regulations, potentially leading to fines and damage to the firm’s reputation. 

Failures in due diligence not only attract regulatory penalties but also undermine the firm’s reputation, affecting client trust and future business opportunities.

Start due diligence by using Xapien

Law firms are using Xapien at the start of client onboarding to address a key challenge of Customer Due Diligence (CDD): uncertainty of where to begin. 

Xapien provides an upfront view of a client’s risk profile by analysing and summarising publicly available information from the open web that’s only about the client. This mitigates the risk of confusing individuals who share the same name but aren’t the intended subject. 

By presenting this level of knowledge within minutes, it signals whether further scrutiny in structured databases is needed. This enables compliance teams to quickly pinpoint clients who need more thorough investigation due to potential higher risk. Consequently, it eliminates the need to invest time and potentially incur partner fees on clients where low risk is clear.

Read more: How law firms use Xapien for Initial Due Diligence in client onboarding

Scope the required level of due diligence

Without knowing the full extent of risk tied to a client, determining the necessary level of due diligence is challenging. Xapien reports provide concise and easily understandable summaries, enabling compliance teams to swiftly understand the risk level and make decisions accordingly. Armed with Xapien reports, firms can customise their due diligence efforts, efficiently allocating resources. This enables tailored approaches—conducting thorough investigations for high-risk clients and streamlined checks for those deemed low-risk.

Comprehensive search

Xapien scours the entire indexed internet and corporate databases to find and analyse every relevant piece of information available. This exhaustive approach guarantees that law firms base their assessments on the most complete and up-to-date data.

Never misses an important insight

Xapien finds everything there is to know. Its advanced algorithms ensure that every piece of relevant information on the indexed internet is found and analysed. This ensures that risk assessments are based on the most complete and recent information available.

Halves time spent on manual research

Manual research that took days can be done in minutes so compliance teams can get through KYC checks quicker. This time-saving time allows analysts to focus on more strategic aspects of their work.

Automates report generation

As well as data collection and analysis, Xapien writes fully sourced and regulatory-compliant reports. These reports aren’t just comprehensive but also structured in a manner that is easy to interpret, so other teams can quickly understand the findings and act on the recommendations.

Bonus: Use Xapien at the end for reassurance

Xapien also acts as a final check, providing extra assurance that compliance teams have done the right level of due diligence. It demonstrates thoroughness to regulators and ensures the integrity of long-term decision-making. The platform produces time-stamped, auditable reports, serving as reliable records for internal audits and regulatory reviews, adding an extra layer of confidence in the firm’s compliance efforts.

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