AMLify's Sanctions & PEP Screening for Law Firms
AMLify now runs automated sanctions and PEP screening at client intake, helping Australian law firms meet Tranche 2 CDD obligations.
AMLify has added automated sanctions and politically exposed person (PEP) screening for law firms, running the check the moment a client or beneficial owner is entered into a matter, rather than as a separate manual step bolted onto onboarding.
Why does sanctions and PEP screening matter for law firms under Tranche 2?
Law firms became AUSTRAC reporting entities under the Tranche 2 reforms to the AML/CTF Act 2006, and customer due diligence now has to include a check against sanctions lists and a screen for politically exposed persons (PEPs) for every client on a designated service. Conveyancing, trust administration, and company or trust formation work all carry this obligation, and the risk is highest wherever a matter touches high-value transactions, offshore parties, or complex ownership structures.
What does AMLify's screening feature actually check?
- Consolidated sanctions lists — DFAT's Consolidated List and UN Security Council sanctions are checked automatically at intake
- PEP status — domestic and foreign politically exposed persons are flagged, including immediate family members and close associates
- Beneficial owners, not just the instructing client — screening runs against every individual identified on the matter, not only the named client
- Ongoing rescreening — long-running matters are flagged for periodic reruns rather than a single point-in-time check
When should a law firm run this screening?
- At matter intake, before providing any designated service
- When beneficial ownership changes, such as a new director, trustee, or appointor added mid-matter
- On a periodic basis for long-running matters, including ongoing trust or estate administrations
What happens when AMLify flags a potential match?
A flagged result doesn't auto-block a matter — it surfaces for human review by the firm's AMLCO, who confirms whether it's a genuine match or a false positive based on name variants and identifying details. A confirmed match against a sanctions list or a PEP finding triggers enhanced due diligence, and if the underlying conduct looks suspicious, it may also trigger a suspicious matter report to AUSTRAC. AMLify's compliance tools for law firms keep the screening result, the AMLCO's decision, and any escalation together in one auditable record.
Key Takeaways
- Sanctions and PEP screening is a mandatory CDD step for law firms providing designated services under Tranche 2
- Screening should cover beneficial owners, not just the instructing client
- AMLify runs the check automatically at intake and flags matches for AMLCO review rather than blocking matters outright
- Long-running matters need periodic rescreening, not just a one-off check at the start
- A confirmed match triggers enhanced due diligence, and potentially a suspicious matter report
Frequently Asked Questions
Q: Do law firms have to screen every client against sanctions lists?
Yes. Under the AML/CTF Act 2006, law firms providing designated services must conduct customer due diligence that includes sanctions screening for every client, and this extends to beneficial owners identified on the matter.
Q: What counts as a politically exposed person?
A PEP is someone who holds, or has held, a prominent public position — domestically or overseas — along with their immediate family members and close associates. AUSTRAC guidance treats foreign PEPs as automatically higher risk, warranting enhanced due diligence.
Q: Does a screening match mean the firm must decline the matter?
Not automatically. A match needs to be verified as genuine rather than a false positive, and a confirmed match calls for enhanced due diligence and senior management sign-off before the firm decides whether to proceed.
Q: How often should a long-running matter be rescreened?
There's no single fixed interval in the legislation — firms should set a rescreening frequency proportionate to the matter's risk, and rescreen immediately whenever beneficial ownership or control changes.
This is general information only and not a substitute for legal advice.