What You Should Know About CDD & AML for Attorney Paymaster Services

Working with an attorney paymaster is a good idea for businesses engaging in large transactions including real estate, jet fuel, gold or diamonds, and note transactions. These often involve significant amounts of money and have several federal regulations that you must satisfy to avoid legal trouble.

As paymaster, the attorney acts as a neutral third-party to receive funds from a buyer, hold them in escrow as all the paperwork and legal requirements are settled, then release the funds to the seller. Anyone looking to hire an attorney in these capacities should be aware that they must comply with certain regulatory requirements around KYC, CDD, and AML.

AML, KYC and CDD processes are an important part of attorney paymaster services.

Breaking Down KYC, CDD, and AML

Regulatory landscapes around financial transactions have a lot of abbreviations and acronyms, but perhaps none more important than:

  • KYC — Know Your Customer/Client
  • CDD — Customer Due Diligence
  • EDD — Enhanced Due Diligence (sometimes required)
  • AML — Anti-Money Laundering

These are requirements that attorney paymasters must satisfy in order to represent clients in a financial transaction.

Know Your Customer/Client

KYC is a critical part of financial transactions, particularly large or international transactions. These activities are intended to provide more information about the person or company behind the transaction to ensure the funding source is legitimate and not tied to nefarious organizations, such as terrorism or organized crime.

Customer Due Diligence

In order to manage risk effectively and protect themselves from potential involvement in financial crimes or similar activities, attorneys perform CDD. This process, along with the KYC activities, provides in-depth information about the location and identity of a client and a client’s activities to properly assess potential risks. It’s critical that clients work with attorneys to complete the CDD process to avoid delays in the transaction.

Enhanced Due Diligence

Some high-risk customers may need to go through an enhanced due diligence process to get a better understanding of their financial activities. The initial CDD will usually determine whether a more in-depth review is necessary. What may trigger EDD? High transaction amounts or volume, ties to high-risk countries, or evidence of current or past high-risk activities.

Anti-Money Laundering

AML activities ensure that an attorney paymaster will not participate in transactions for purposes of money laundering or with laundered money. The purpose is to make it more difficult for someone involved in criminal activities to get away with the money, and to prevent corruption, tax evasion, theft or fraud. AML usually involves an initial review, then continual monitoring of financial transactions to spot potential red flags.

If you are interested in working with Cantley Dietrich for attorney paymaster services, contact us today to learn more about our KYC, CDD and AML processes and important details about how these services can benefit you in certain financial transactions.