Anti-money laundering checks are vital for law firms, ensuring they don't unwittingly support money laundering and terrorist financing activities. Yet, even the most diligent firms can fall into common traps that undermine their AML compliance. Whether it’s over-relying on manual processes or neglecting ongoing monitoring, these missteps can result in fines, inefficiencies, and even reputational harm.

In this guide, we’ll explore five common pitfalls in AML checks and share practical solutions to help your firm avoid them. By avoiding these common mistakes, your law firm can successfully prevent money laundering and remain compliant at all times.

Pitfall 1: Over-Reliance on Manual Processes

Manual anti-money laundering checks create significant challenges for law firms. While conducting client due diligence (CDD) and verifying bank statements can achieve basic compliance, these manual processes are inefficient and prone to errors. They consume valuable fee-earner time and create bottlenecks in client onboarding.

As firms grow and money laundering risks evolve, manual processes become increasingly unsustainable. They make it difficult to maintain effective ongoing monitoring or implement a proper risk-based approach, particularly when handling high-risk clients or enhanced due diligence requirements.

The solution lies in AML software, which automates ongoing monitoring systems while reducing false positives. Firms can combat money laundering and comply with AML regulations with minimal manual effort, freeing staff to focus on higher-value activities.

Pitfall 2: Neglecting Enhanced Due Diligence for High-Risk Clients

CDD isn't a one-size-fits-all process. While standard checks suffice for most clients, high-risk individuals—including politically exposed persons (PEPs) and those from high-risk jurisdictions—require enhanced due diligence (EDD) measures to protect against money laundering risks. Yet many firms struggle to differentiate their approach, either missing crucial red flags or creating unnecessary friction for lower-risk clients.

EDD requires deeper investigation into a client's background, source of funds, and source of wealth. By implementing a risk-based approach supported by AML software, firms can automatically identify when EDD is necessary and streamline investigations. This ensures thorough compliance with money laundering regulations while maintaining efficient onboarding for standard-risk clients.

Pitfall 3: Inadequate Ongoing Monitoring

While many law firms focus on anti-money laundering checks during onboarding, CDD isn't a one-time exercise. A client's risk profile can change significantly throughout the business relationship—a low-risk client may become high-risk due to changes in their financial activity, jurisdiction, or political status. Without proper ongoing monitoring, these shifts and potential suspicious activity can go unnoticed.

Static compliance measures like periodic reviews aren't enough to meet UK money laundering regulations. Firms need dynamic monitoring systems that can identify irregularities in real time. AML software provides this continuous oversight, automatically flagging anomalies and updating risk profiles to ensure your firm maintains effective compliance while protecting against reputational damage.

Pitfall 4: Mismanaging False Positives

False positives present a significant challenge in anti-money laundering checks, occurring when legitimate clients are incorrectly flagged for suspicious activity. These unnecessary alerts not only strain compliance teams but also create frustrating delays in the AML check process, potentially damaging client relationships.

The solution isn't to relax compliance standards—which could miss genuine money laundering activities—but to implement smarter monitoring systems. Modern AML software uses advanced monitoring tools to better distinguish between genuine and false alerts, while a risk-based approach helps focus scrutiny where it's most needed. This balanced approach maintains thorough compliance while reducing unnecessary friction in client relationships.

Pitfall 5: Poor Documentation Practices

Documentation forms the foundation of AML compliance, yet many firms struggle to maintain comprehensive records. The Money Laundering Regulations require detailed documentation of all aspects of the AML check process—from initial client due diligence to ongoing monitoring. Without proper records showing their assessment of risk and adequate measures taken, firms risk failing regulatory audits even when their actual compliance practices are sound.

The solution lies in standardising documentation processes through AML software. Automated systems create clear audit trails of every verification process, risk assessment, and suspicious activity investigation. This systematic approach not only satisfies regulatory bodies but also improves operational efficiency by ensuring all compliance information is readily accessible and properly stored.

How Legl Helps Law Firms Avoid These Pitfalls

Legl provides a tailored solution for law firms looking to streamline their anti-money laundering checks while maintaining robust AML compliance. Legl directly addresses the 5 most common pitfalls we've just touched upon, ensuring that firms can operate efficiently, avoid regulatory risks, and boost the client experience. Here's how.

Automating Manual Processes

Legl’s platform automates time-consuming tasks such as client due diligence and transaction monitoring. This reduces the reliance on manual workflows, minimising human error and freeing up staff to focus on high-value work. From verifying client information to identifying beneficial owners, Legl ensures an efficient and accurate process when firms conduct AML checks.

Simplifying Enhanced Due Diligence

For high-risk clients, Legl supports firms in implementing enhanced due diligence (EDD) seamlessly. The platform flags politically exposed persons (PEPs) and high-risk jurisdictions, helping firms tailor their approach to meet money laundering regulations. By centralising risk assessments and EDD measures, Legl makes it easier to handle complex cases without creating delays.

Enabling Proactive Ongoing Monitoring

Legl’s dynamic monitoring systems ensure that firms stay compliant throughout the lifecycle of a client relationship. The platform continuously tracks transaction behaviour and updates client risk profiles in real time, enabling firms to detect and respond to suspicious activity as it arises. This proactive approach ensures no red flags go unnoticed.

Reducing False Positives

Legl’s intelligent tools are designed to reduce false positives, helping firms focus on genuine risks without unnecessary disruptions. The platform’s advanced algorithms prioritise accuracy, ensuring that compliance teams spend their time on meaningful investigations rather than chasing false alarms.

Ensuring Clear and Comprehensive Documentation

Legl’s platform automates record-keeping, creating a detailed audit trail for every AML check. This includes logs of due diligence measures, risk assessments, and flagged suspicious activity. With Legl, firms can easily demonstrate compliance to regulatory bodies, avoiding the risks associated with poor documentation practices.

Final Thoughts

Anti-money laundering checks are a fundamental part of law firm operations, safeguarding against financial crime, ensuring compliance with money laundering regulations, and protecting a firm’s reputation. However, even with robust processes in place, the 5 common pitfalls spoken about in this article can undermine efforts and create unnecessary risks.

The solution? To adopt dedicated AML software like Legl. With Legl, firms can automate workflows, improve accuracy, and maintain clear documentation. Ready to take your firm’s AML processes to the next level? Book a demo today to learn more about Legl.