In the current regulatory environment, the pressure appears, on the face of it, to be targeted towards financial service firms. But that’s not what’s going on under the radar. Managing compliance in the professional services sector is equally difficult.
For the professional services sector the regulatory landscape is becoming more complex, with compliance striking firms on multiple fronts. It’s enough to make even the most experienced compliance professional lose sleep. Remaining compliant is difficult as firms are unprepared for changes in compliance requirements and the risks that come from not keeping pace.
Compliance in professional services
We have seen demands increase in many of the professional services sectors. Particularly legal, accountancy and even telecommunications firms when it comes to managing compliance.
A recent case, reported by the Law Society, saw a small legal firm fined £20,000 by the Solicitors Regulation Authority (SRA) for anti-money laundering (AML) compliance breaches. The firm was fined after the SRA found it failed to put in place a practice-wide risk assessment compliant with regulation 18 of the Money Laundering Regulations (MLRs) 2017.
By omitting the risk from its conveyancing work – which amounted to 75% of fee income – the firm was held by the SRA to not have fully assessed its product/services risks.
Accountancy firms also need to meet their extensive obligations for money laundering supervision, including customer due diligence, record keeping and reporting suspicious activity.
We’ve previously written about the need for KYC verification to eliminate SIM card fraud in the tTelecoms industry. This is another industry within the professional services sector which is having to manage compliance on a wider scale.
Budget limitations
Managing compliance is complicated, but also very costly for professional service firms. The cost of delivering daily compliance can be difficult to meet, but the cost of non-compliance is even greater.
According to Thomson Reuter’s 2021 Cost of Compliance research, the expenditure for compliance- related costs have increased by 7% in the last couple of years.
Firms that don’t allocate enough budget to professional compliance management can struggle to stay up-to-date with obligations and risk running into legal issues or penalties from regulators.
Managing the processes of compliance in professional services
Many professional services firms have relied on manual processes and old-fashioned ways of researching data. Using spreadsheets, Google for searching documents and beneficial ownerships as well as shared files and documents, is inefficient and can lead to human error and mistakes.
It could also mean that professional services firms are missing out on the benefits of automated compliance management systems.
Adopting technology is the way forward
Professional Services firms are increasingly investing in new technology solutions to automate their daily compliance tasks. Realising that platforms such as NorthRow WorkStation can be tailored to their individual business needs.
Recognising that onboarding new clients and monitoring ongoing clients is achieved far more efficiently has been a key driver.
For effective compliance management, during times of business growth and squeeze of headcount, professional services need to embrace and implement technology for compliance.
Using compliance software to automate daily compliance tasks to make sure the regulators are kept happy will save money and time. The software also ensures that a full audit trail is accessible if there is ever a knock at the door!
