At Aventine Lab, we speak to compliance professionals and vendors every week. Below is a detailed breakdown of the seven most urgent AML compliance challenges facing the legal sector.

1. Inadequate Risk Assessments

The root of most regulatory failures.

Between 75–80% of recent AML fines can be traced back to incomplete or inadequate risk assessments. Some firms have well-written policies but fall short in practice. Others lack in policy or practice.

Common pitfalls include:

• Poor record keeping with
• Disconnect between policy and real-world implementation
• A lack of knowledge on how to properly verify complex scenarios.
• Inconsistent scoring of risk across client types, geographies, and product lines
• Overuse of spreadsheets and manual tools for highly complex workflows
• Poor data integration, siloed inputs, unstructured information, and static reviews
• No clear linkage between individual client risks and firm-wide exposure
• A lack of real-time updates when risk factors change (e.g., sanctions lists, PEPs)

Risk assessments are not just tick-box exercises, they form the basis of every AML/CTF decision. Poor assessments mean systemic vulnerabilities.

Solutions available:

• Forsyte is building a standalone, agnostic platform to capture, manage, and monitor firm-wide risk assessments across clients and matters. It acts as the “source of risk truth” by ingesting data from tools like First AML, Legl, PMS systems and others.
• Legl is a comprehensive client onboarding and payment tool specially designed for law firms, with the addition of their risk assessment product they offer firms a complete end to end tool.
• First AML offers a comprehensive onboarding platform with matter and client risk assessment facilities for each onboarding/client.

2. Source of Funds and Wealth Verification

Still the most misunderstood compliance requirement.

While KYC has improved, SoF/SoW remains a major blind spot, especially in high-value or cross-border transactions.

Specific challenges:

• Authenticating foreign and translated documents
• Verifying complex corporate structures and layered funding flows
• Manual checks that drain time and introduce human error
• Inconsistent application of a risk-based approach across departments
• Difficulty spotting tampered or forged documents

Regulators are increasingly targeting firms for SoF/SoW failures. In high-risk transactions (property, corporate, crypto), getting this wrong is no longer tolerated.

Solutions:

• Legl’s Open Banking + AI powered Source of Funds feature automate the entire process of gathering, verifying and investigating. Removing the back and forth between lawyers and their clients.
• Armalytix provides a specialised platform for Source of Funds (SoF) and Source of Wealth (SoW) verification. Their tool enables law firms to automate the collection and processing of financial data required for compliance. Through direct integration with banks and partnerships with tools like Minerva and First AML.

3. Digital Fraud is Evolving Faster Than Compliance

AI-driven fraud is outpacing legacy onboarding systems.

Fraud is no longer about fake IDs, it’s about synthetic identities, deepfakes, and end-to-end deception.

Key risks include:

• Use of AI to create fake documents or deepfake videos
• Impersonation scams during digital onboarding
• Fake wallets and fintech abuse
• Document forgery that can bypass basic OCR or image checks
• Vulnerabilities in digital payment systems, especially peer-to-peer apps

The shift to digital has created speed and scale, for both onboarding and fraud. Firms need to reassess whether their controls can keep up.

Solutions

• Tools like ID/Verse use AI and LLM to create robust anti-fraud detection system, capable of detecting tempered or fake IDs, deepfake videos, or forged document.

4. Regulatory Overload and Compliance Gaps

Keeping up is now a full-time job, if you can afford it.

AML regulations are expanding, deepening, and fragmenting by jurisdiction. Many firms are falling behind.

Key pressure points:

• Adapting to new legislation in unfamiliar markets
• Preparing for reforms like Tranche 2 in Australia
• Limited in-house expertise, especially in small to mid-size firms
• High cost of external legal and consulting support
• Staff training gaps, especially around new technologies or obligations

Falling behind on compliance is not just a legal risk, it’s a commercial liability. The cost of fines, remediation, and reputational damage is growing.

5. Tech and Market Fragmentation

There’s a RegTech for everything, and no one knows which to choose.

The RegTech market has exploded, particularly in AML and onboarding. But this has introduced its own set of problems.

Emerging issues:

• Too many vendors offering overlapping features
• Lack of interoperability between systems (e.g., screening + case management)
• Siloed data, poor UX, and no single source of truth
• Hard to evaluate tools without live demos or real-world scenarios
• High TCO (total cost of ownership) when using multiple disconnected tools

Tech is meant to simplify, but poorly integrated RegTech stacks can actually increase operational risk.

6. Cross-Border Complexity

Sanctions, structures, and standards vary wildly, even within regions.

Global commerce is borderless. Compliance is not.

Major cross-border pain points:

• Verifying foreign company ownership structures
• Adapting onboarding processes for new jurisdictions
• Interpreting conflicting privacy and AML rules
• Managing global sanctions updates and screening processes
• Difficulty in sourcing translated, authenticated documentation

As firms scale globally, compliance becomes more fragmented, and more risky. What’s compliant in the UK might be non-compliant in the UAE.

7. Economic Pressure on Compliance Teams

More work. Fewer resources. Higher stakes.

Regulatory risk is rising, but many firms are slashing budgets or freezing hiring.

Key resource constraints:

• Cost of modern AML tools
• Lack of skilled compliance professionals
• Difficulty keeping up with training and regulatory awareness
• Pressure to “do more with less” in already stretched teams
• Business priorities (growth, margin) clashing with compliance spend

Under-resourced compliance is risky compliance. And in regulated sectors, that’s a business risk, not just a legal one.

Conclusion

Many firms approach these issues as isolated problems, but the reality is they are symptoms of a fragmented risk management framework.

What’s needed is an integrated, cross-functional compliance strategy that spans:

• Policy to practice
• Risk to reward
• Front-line operations to board-level oversight
• Technology to people to process

At Aventine Lab, we help RegTechs and regulated entities bridge these gaps through:

• Vendor selection, workflow management and market mapping

If you’re facing any of these challenges, as a buyer or a vendor, we’re here to help make clarity the competitive advantage.