WorkflowLaw Firm Risk, Intake & Compliance

Client Due Diligence for Law Firms

AML client due diligence that starts from the matter and traces each owner through companies and trusts to the people behind the client.

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The problem

A layered buyer means registry extracts, a trust deed and a tick box

Before acting on a property purchase, a company sale or a trust, the firm has to know who it is acting for. With a corporate client that means registry extracts from several countries, a trust deed read clause by clause, and each name in the chain screened while the deal waits.

Then someone rates the risk by ticking high, medium or low, and the reason stays in their head. Inspectors keep finding files with no risk assessment at all, and source-of-funds checks with nothing behind them. A firm with offices in two countries also runs two rulebooks, and its checklist has to know which one applies.

Built forMoney laundering reporting officersIntake analystsFee earnersRisk and compliance teams

The Problem Today

A law firm must trace each client to the people behind it, and inspectors keep finding the reasons missing.

22%: of law firms reviewed by the regulator were fully compliant published
19%: of files reviewed had no client and matter risk assessment published

Done by hand today

Registries
Trust deeds
Screening
Risk forms

Source of funds unprovenFiles that needed the check often lacked the evidence
Two offices, two rulebooksLawyers in a second country now carry the same duties

The Solution

The matter picks the rulesIn scope or not, and which rulebook applies, with the rule cited
Owners traced to peopleCompanies and trusts, layer by layer, each one verified and screened
Exposed people foundA beneficiary in public office raises the rating and the plan is drafted
Approved with a reasonThe reporting officer signs; the fee earner sends the requests

Built-in controls

Only a person clears a sanctions match
Agents may raise a rating; only the officer lowers it
Agents never write to clients

What You Get

Inspectors find a cited file with the reason for each decision, and fee earners act without waiting.

1.5 h: of intake time per layered client, down from about 6 our estimate

One record for the inspectorScope, owners, checks and approvals in the order they happened
The office's own rulebookChosen by the matter, with its own checklist and threshold
Requests a client can answerWhat the rating calls for, and why, in plain words

Nine checks, one file

AML client due diligence on a corporate buyer, check by check

Each screen below does one part of the file, for one person.

01Scope decision
A scope decision that reads the instruction and quotes the rule it applies
How it works
- Reads the instruction letter first, because the service decides the duty
- Names the listed service, quotes the rule and picks the rulebook, at 98% confidence
- Sets each other rulebook aside with a one-line reason
- A matter counts as out of scope only once the fee earner confirms it
Fee earnerKnows whether the anti-money laundering rules apply to this matter, and under which rulebook, before the client is asked for a single document.
02Documents read
Passports, registry extracts and deeds read with a confidence on each value
How it works
- Documents grouped under the company or person they prove
- Each extracted value carries its confidence; below 90%, a person checks it
- Each passport matched to its selfie
- 20 of 27 documents read, 149 of 214 pages, while the trust deed waits
Intake analystStops retyping names, dates of birth and company numbers from registry extracts in four jurisdictions and a stack of passports.
03Ownership tree
An ownership tree drawn layer by layer, with three marks on each owner
How it works
- Registry extracts and registers of members become one tree, with percentages on the lines
- Each node marked document read, registry matched and screened
- Clicking a node opens its facts beside the passage that holds them
- A trust whose deed is still unread stays open, and the rating stays provisional
Intake analystSees in one picture who owns or controls the client, and which owner still has no evidence behind it.
04Trust deed read
A trust deed read for its settlor, its beneficiary and its protector
How it works
- Reads the 52-page deed and the letter of wishes the client uploaded
- Adds the settlor, the named beneficiary and the protector to the tree
- Pulls a registry extract for the protector and screens all three
- The beneficiary comes back as a politically exposed person, so the rating turns High
Intake analystNo more reading a trust deed clause by clause to learn who stands behind 62% of the client.
05Screening
Each name screened, and each near match set beside its listed namesake
How it works
- 14 names checked against sanctions lists, exposed-person data and the press
- A possible match puts our person beside the listed one: name, birth, nationality, address
- The agent proposes; the analyst clears it with a reason and the passport page
- A true exposed-person result goes straight to the reporting officer
Intake analystClears a name match in one read, with the evidence on the record, where a bare note saying checked used to sit.
06Rulebook checklist
A rulebook checklist filled from the documents, each value cited to its page
How it works
- Grouped as the rulebook asks: the client, its beneficial owners, the individuals, screening, risk and approval
- Each item shows its value and the document page it came from
- 26 filled from documents, 5 enhanced items open, 2 of 3 decisions made
- An item is filled only from a document or a registry, never from the client alone
Intake analystOpens a checklist already filled from the evidence, so the time goes on the five open items instead of the done ones.
07Risk assessment
A client and matter risk assessment scored factor by factor, with reasons
How it works
- Six client factors and four matter factors, each with its points and its reason
- The exposed beneficiary adds 19 points: 52, Medium becomes 71, High
- Bands set by the reporting officer: Low below 35, Medium 35 to 59, High 60 and over
- Lists what a High rating requires, from enhanced checks to senior approval
Money laundering reporting officerReads the reason behind each point on the page, in place of a high, medium or low box a fee earner ticked.
08Enhanced due diligence
Enhanced due diligence requests drafted in plain words, each with its reason
How it works
- Five items: source of funds, source of wealth, trust changes, a declaration, senior approval
- Why it is needed, and who should supply it, on its own line
- A draft letter to the client's director, ready for the fee earner to send
- Exchange stays blocked on the matter until items 1 to 4 are in
Fee earnerGets exactly what to ask the client for, and why, in words that can go out under the fee earner's own name.
09Approval with a reason
Approval by the reporting officer, with a written reason kept on file
How it works
- The client, the rating, why it rose and the plan, in one box
- A written reason is required before approval
- Approval cannot come from the analyst who built the file
- Once approved, the requests are ready for the fee earner to send
Money laundering reporting officerPuts the reason for each decision on the page an inspector reads, where before it lived in someone's head.

Nine entities and five people stand behind one buying company

The client's ownership tree, by role, once the trust deed is read.

Layer	Who stands there	Holding	Result
Layer 1	Offshore holding company	62% of the client	Name match cleared
Layer 1	Limited liability partnership	26% of the client	Clear
Layer 1	Director	12% of the client	Clear; verified as director
Layers 2 and 3	Two people behind the partnership	13% effective each	Clear, one name match cleared; both below threshold
Layer 2	Regulated trustee	100% of the holding company, as trustee	Clear
Layer 3	Family trust	Holds the 62% through the trustee	Clear
Layer 4	Settlor	Settlor of the trust	Clear; beneficial owner
Layer 4	Named beneficiary	Beneficiary under the deed	Politically exposed person; beneficial owner

Two near matches cleared and an exposed beneficiary found in one file

Four things this file turned up, each answered on the record.

A listed person with the same name

An owner shared a name with a sanctions listing born in 1961. Ours was born on 14 March 1979, with another nationality, so the analyst cleared it from passport page 2.

A listed company with a near-identical name

The holding company's name came close to a listed one. A different registry number and different directors cleared it.

A beneficiary in public office

The deed names a beneficiary serving as a state secretary since March 2023: a foreign politically exposed person, adding 19 points and moving the rating from 52 to 71.

The people behind 62% sat in an unread deed

Until the client's trust deed was read, the tree showed the trust as open and the rating stayed provisional.

Around the file

More AML client due diligence screens, from scope to the record

What the fee earner, the officer and internal audit open around the tree.

Table of new matters scoped today: purchases, sales and a trust in scope, litigation and a license negotiation out of scope, each with its reason — **The day's new matters, scoped**Six of the day's matters, each in or out with its reason: tribunal defense and a patent license fall outside; a family trust and a land sale fall in.

Provisional risk assessment at 52, Medium, with client and matter factors scored and a note that the people behind the trust are not yet known — **A rating marked provisional**Before the deed is read the score is 52, Medium, and the screen says why it cannot be final: the people behind the trust are not yet known.

Citation opened from the checklist: page 1 of 12 of a company registry extract, with the company name, director and controlling entity highlighted — **One value, opened at its source**A click on any citation shows the registry extract it came from, with the director and the controlling holding company highlighted.

Checklist preview under the second office's rulebook: owners at 25% or more, trust roles including the appointor, and exposed-person and reporting items — **The same client, under the other office's rules**A preview of how the firm's second office would check this client: owners at 25% or more, an appointor in place of a protector, and its own reporting duties.

Inspection record: 29 of 34 checklist items done, 27 documents read, 14 names screened, and each step by a person or agent with its evidence — **The record an inspector reads**Who verified, screened and approved, people and agents, each with a time and its evidence, down to the officer's reason. Entries cannot be changed.

Settings: rulebooks by office, ownership thresholds, a screening review score of 85 and above, risk bands, separation of duties and data retention — **Thresholds and who may do what**Rulebooks by office, a match score of 85 for review, the risk bands, and roles kept apart so that whoever prepares a file does not approve it.

The analyst clears matches, the officer approves, and the fee earner sends

The agents propose. Each decision that counts carries a person's name and reason.

Intake analyst

Sees: The ownership tree, the documents and each screening hit beside the listed person
Signs: Clears each name match with a reason, and checks the plan before it goes up

Fee earner

Sees: The scope decision with its rule quoted, and the drafted letter to the client
Signs: Confirms the scope, and sends only the requests the officer approved

Money laundering reporting officer

Sees: The rating factor by factor, the plan, and who prepared the file
Signs: Approves high-risk clients, the rating and the plan, and alone may lower a rating

Before a reporting officer relies on AML client due diligence

What is AML client due diligence for a law firm?

AML client due diligence identifies and verifies a client and the people who own or control it, screens them, and rates the client and the matter for risk before the firm acts. Here it starts with a scope decision, and the reporting officer approves the result.

How does it know whether the rules apply to a matter?

The scope agent reads the instruction letter and names the service. Buying land, selling a company or forming a trust is in; litigation is out. It quotes the rule, and the fee earner confirms.

How far down the ownership chain does it go?

To the people who own or control the client, through each company and trust in between. A declaration by the client is not enough: each owner needs a registry entry or a document.

Can an agent clear a sanctions match or lower a rating?

No. The screening agent proposes and explains each hit, and a person clears it with a reason. Agents may raise a rating; only the reporting officer may lower one.

What happens when an owner turns out to be a politically exposed person?

The rating rises with its reason shown, and enhanced due diligence begins: source of funds, source of wealth, a declaration and senior management approval. Exchange stays blocked until the evidence is in.

Can one firm run a different rulebook in each office?

Yes. Each office has its own rulebook, ownership threshold and data region. The checklist can preview how the other office would check the same client.

Where are the passports and selfies held?

In the firm's workspace, in the region of the office acting on the matter. Selfie images are masked in exports, no model is trained on them, and records are deleted with a log after the retention period.

Law Firm Risk, Intake & Compliance