Are Lawyers Failing to Mitigate Increasingly Sophisticated
From KFC's supply chain issue to fish and chip shops around the UK unknowingly using illegally imported shark fins in produce, dirty supply chains might have serious reputational and financial risks for businesses.
It's an element that universally impacts many of us too. Take money laundering – latest government reports found that money laundering cost all households in the UK lb255 this past year. Couple by using the UK's National Crime Agency receiving an archive number of reports related to money laundering, terrorist financing and other alike suspicious activity, and it is clear how serious of an issue this is.
The role of law and government
A recent SRA investigation discovered that a third of law firms fell short in mandatory risk assessments, while poor training processes meant firms could be unwittingly assisting money launderers. The government reacted by drawing up the Economic Crime Arrange for government, law enforcement and businesses to work together to tackle money laundering, fraud and corruption.
The Law Commission's recommendation of the dedicated advisory board, would let the UK to enhance and support anti-money laundering prevention practices. Prevention is essential for all businesses because money laundering practices can manifest very at the start of the availability chain, meaning companies are often unacquainted with any issue.
While it's encouraging to determine the government do something, companies are equally responsible for knowing who they are dealing with in their logistics.
Tackling your 'dirty laundry'
The increasing sophistication of criminal organisations as well as their capability to hide illegal activities within supply chains is really a significant challenge for businesses. This is exactly why it's more important than ever to know the precise suppliers, partners and customers that the business works with. Use of details for example beneficial ownership and individuals with Significant Control are necessary steps to consider when vetting existing suppliers. Equally so, it's important to operate a Politically Exposed Persons check that may uncover risk before onboarding new partners.
Many organisations neglect to realise the goldmine of valuable internal information and, equally, neglect to activate it. Internal data can highlight exactly where cash is being used, which suppliers use which departments and how resource has been divided. Failing to regularly audit these details can aid nefarious practices including money laundering. Data that's outdated, poorly formatted and inconsistent can damage effective compliance functions, helping bad actors to poison the supply chain.
Is Technology is the next step?
It's well known that clean data is essential to business growth. But clean and accurate data also enables businesses to invest in and benefit from technology solutions that aid preventative measures within the logistics.
PWC analysed the way forward for onboarding and suggested that technology could be a solution to help accurately identify and verify third-party relationships, using technologies such as biometrics, blockchain and artificial intelligence . For example, law practice LLR is applying AI to translate foreign documents for attorneys, not waste time and assisting to process vast volumes of information effortlessly. The same framework can be applied to a compliance model, untangling millions of data points and identifying – and therefore reducing – dishonest suppliers that could be laundering money.
Indifference can lead to failure to prevent illegal activity
Ignoring this concern in today's business world is not an option. By investing in a data-led strategy, businesses can uncover all processes in the logistics and equip themselves to combat financial crime, even while it becomes more complicated.
The only way to avoid contact with regulatory fines and irrevocable reputational damage is thru transparent data, and an investment in tech that aids compliance, complements a company's existing regulatory processes and improves research.
