Best in class Source of Funds and how we’re achieving it

A true source of funds check is so much more than looking at a set of bank statements. Over the past few years, we have developed the best-in-class Source of Funds (SoF) checks in the legal market space with upfront fact finds, market leading analysis and a Legal Eye endorsed questionnaire. To do this we have combined cutting edge technology, with a deep understanding of both what is required by the regulators and what the needs of a modern law firm are – all whilst creating a simple, slick digital experience for the client.

We work with the brightest, biggest and best firms to understand their challenges and to harness their creativity and vision of what the ideal SoF solution should be.

As part of this, we recently held an Innovation Day with some of our key partner firms. The day focused on discussing current practices, potential hurdles and aspirations for how Armalytix can help shape the way SoF is carried out in the future.

In attendance on the day were team members from Woodford Stauffer, Sail Legal, Smoove, The CS Partnership, Legal Eye, Taylor Rose and O’Neil Patient.

Below are the key insights and future innovations you can expect to see:

Why documenting SOF is vital for Conveyancers

Besides complying with the legal requirement, documenting the SoF of a client enables a solicitor/lawyer to:

  • Understand the client’s background and financial history.
  • Understand how and where capital was generated.
  • Identify if a client’s transactional activity aligns with what is expected based on the data recorded about them.
  • Assess if activity and transactions are potentially suspicious.

Income Insights

We asked those in attendance – how much attention do you pay to income on SoF?

  • In an SoF check, income can get overlooked in favour of looking at the more significant sums being transferred.
  • However, income forms an important part of understanding your client and the overall financial picture – particularly their ability to purchase a property.
  • The Armalytix team talked through and demonstrated what analysis of this income might look like.

Coming soon will be an income insight tool that will categorise different sources of income.

Risk Insights

A key area of focus from the day was to bring the identification and assessment of risk forward in the transaction. To do this it was identified that a customisable risk insight system would help provide greater visibility of risk as part of the initial report, enabling firms to make smarter, faster and more accurate risk-based decisions.

  • This would help show regulators how conveyancers are managing the risk on a file-by-file basis.
  • Firms must therefore be able to change and set their own values for red flags in line with their practice-wide risk assessment.

Key Armalytix clients are currently helping develop this for release in the not-too-distant future.

Final Word

As all effective law firms know, the complexity of an SoF check has increased significantly over the last few years. No longer is having a set of bank statements on file good enough. In order to show your regulator you have determined the integrity of the funds you must be able to evidence your decision-making and provide a clear explanation as to why you took the decision that you did. The development from Armalytix of upfront fact finds, market leading analysis and SoF questionnaires, plus the forthcoming innovations above are allowing law firms to make huge strides in combatting the very real threat of financial crime.

Source of Funds has become far more important and far more complicated. With our partners, Armalytix is making it simple and effective again.

By The Armalytix Team — 18 January 23

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