Lack of trust in technology exposes companies to money laundering

A ‘worrying’ distrust of technology is making some regulated firms vulnerable to financial crime, an anti-money laundering expert has warned.

A cross-industry study by SmartSearch, the UK’s leading anti-money laundering software provider, found that almost one in five (18%) decision makers in the legal, property, banking and finance sectors did not trust to electronics technology. verification software.

Martin Cheek, Managing Director of SmartSearch said: “Our study demonstrates a worrying perception of the market. Not only is adopting electronic verification (EV) the best way for regulated businesses to ensure they are protected against potential money laundering crimes, but its use is recommended in the 2020 money laundering and terrorist financing. The law recommends that regulated companies use EV as part of their due diligence to make it as efficient as possible.

“It’s disappointing that so many regulated companies are ignoring this advice.”

The survey is the second in SmartSearch’s ongoing Uncovered Electronic Verification campaign, which aims to educate businesses in the legal, financial, real estate and banking sectors about the dangers of relying on flawed and outdated identity verification methods. .

Five hundred stakeholders, from regulated businesses across the UK, shared their perceptions of technological advances in their sectors. Almost a third said they thought it was too expensive and almost a quarter (23%) said they thought paper documents were still a more reliable option. In fact, relying solely on paper documents makes businesses more vulnerable to money laundering.

The survey results highlight gaps in new client verifications, with many law firms continuing to rely on paper documents to verify a new client’s identity. Almost a quarter (23.5%) of respondents said they used documents such as passports for identification – although one in ten also said they lacked the confidence to spot a fake.

Onboarding a customer is a lengthy process and can be hampered by cost and time constraints. Coupled with the customer’s reluctance to share data, onboarding becomes unnecessarily time-consuming and ultimately ends in data gaps.

It takes time and money for companies to fill these gaps and there is the risk of losing the customer altogether.

Despite doubts about reliability, nearly half of all companies surveyed still use paper documents like passports, IDs and utility bills in some way to verify new customers. businesses, although more than 83% are aware of digital electronic verification (EV) systems.

Martin Cheek, added: “EV has become invaluable in the fight against money laundering across all sectors. Therefore, it is crucial that UK businesses maintain their support for technological advancements.

“Adopting electronic verification is the best way for regulated businesses to ensure they are protected against potential money laundering crimes. EV uses credit reference data, combined with other sources reliable, to create a unique “composite digital identity” that is virtually impossible to falsify.

“Plus, a system like SmartSearch can complete a check in just two seconds.”

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