Deciphering source of funds

In the complex labyrinth of Anti-Money Laundering (AML) compliance, investigating source of funds plays a vital role. It is the process of meticulously tracing the roots of a client's financial resources used in a legal transaction to ensure their legitimacy and to where possible identify any involvement in illegal activities. Currently, this is achieved by firms conducting source of funds checks — asking clients to provide their bank statements, fill out detailed questionnaires, and submit corroborating evidence to verify the origins of their funds. The central objective is to ensure that the proposed transaction aligns seamlessly with the client's financial capacity and does not facilitate money laundering.

However, this seemingly straightforward process is fraught with complexities and nuances that can make it a cumbersome challenge for  firms and their clients.

‍Navigating the challenges of current source of funds approaches

Despite the essential nature of source of funds checks, the methodologies currently in use are riddled with challenges:

1. Incomplete financial data collection: often, the source of funds procedures fall short of gathering comprehensive and accurate financial information — instances where clients do not connect all relevant accounts or accurately declare the sources of their funds — resulting in data discrepancies.
   

2. Complex information requirements cognitive load for your client: the source of funds process can be a daunting experience for clients (regardless of their legal service experience). They’re required to collect and collate a diverse range of documents and complete exhaustive forms, which can be  time-consuming, stress-inducing, and prone to oversight.
   

3. Provision of insufficient or incorrect evidence: in many cases, we know clients can fail to upload appropriate types of evidence to prove their sources, or provide documents of substandard quality. This forces lawyers to request additional evidence, which in turn leads to further delays and frustration for everyone.
   

4. Data devoid of contextual clarity: often, the evidence provided by clients lacks contextual clarity, making it difficult for lawyers and legal professionals to interpret. This is particularly true for bank statements, which usually require manual review. Additionally, information like background and identity verification checks, which could provide additional context, are seldom linked to source of funds checks.
   

How we continue to innovate what we build for source of funds

Recognising these challenges, Legl has taken significant strides in refining the source of funds process. We have re-engineered the reports provided to lawyers, ensuring they are lucid, engaging, and comprehensive. The revamped reports present a comprehensive summary of all the client's information, maximising the usefulness of the data provided, ensuring you have the context, and information necessary to ensure your source of funds process is robust and thorough.

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We believe this simplifies and improves source of funds checks by:

• Improving financial data collection — showing you more information about the accounts linked and adding greater depth to our financial reporting to provide new insights into transaction type and dynamic balances.

• Better evidence review workflows — workflows that take you directly from the source descriptions to the evidence reviewed so you can quickly make informed decisions about what evidence a client has submitted.
  

• Add context to the data — we have started to build better context into the data we show you, giving you deeper insights into client submissions and allowing you to more effectively decide what if any further investigation may be required.

How we continue to innovate what we build for source of funds

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Recognising these challenges, Legl has taken significant strides in refining the source of funds process. We have re-engineered the reports provided to lawyers, ensuring they are lucid, engaging, and comprehensive. The revamped reports present a comprehensive summary of all the client's information, maximising the usefulness of the data provided, ensuring you have the context, and information necessary to ensure your source of funds process is robust and thorough. 

We believe this simplifies and improves source of funds checks by:

• Improving financial data collection — showing you more information about the accounts linked and adding greater depth to our financial reporting to provide new insights into transaction type and dynamic balances.

• Better evidence review workflows — workflows that take you directly from the source descriptions to the evidence reviewed so you can quickly make informed decisions about what evidence a client has submitted.
  

• Add context to the data — we have started to build better context into the data we show you, giving you deeper insights into client submissions and allowing you to more effectively decide what if any further investigation may be required

You can watch our video to see these changes for yourself.

At Legl, we never stop innovating. With a focus on continuing to improve the solutions available to the legal market, we’re currently looking at how we can add a ‘smart layer’ to our source of funds solution that will  guide your clients through the process, helping them comprehend what information they need to provide and why. This layer of intelligence will also validate the information collected dynamically, ensuring that it has been scrutinised before it reaches the lawyer for review. Our vision is to make source of funds a 'review once' process, where all necessary information is readily available to you when you need it.

Your journey forward with Legl: embracing compliance and innovation

Despite the inherent challenges to source of funds, with the right tools and guidance, it can be a seamless, client-centric process a firm can be proud of. 

If you’d like to learn more about how our source of funds solution helps lawyers, and their clients, ‘do it once and do it right’ or would like more information about our product roadmap then get in touch with us today.

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