Whitepaper urges effective AML due diligence

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Anti-money laundering (AML) specialist SmartSearch has published a whitepaper analysing due diligence undertaken by financial services firms when on-boarding clients.

The report, based upon a survey of 500 regulated firms in the UK, reveals that financial services firms are witnessing increased fraudulent activity, yet many are still using outdated procedures to confirm client identities.

Key findings include:

  • 51% of financial services firms in the UK reported seeing a rise in financial crime attempts in the past 12 months.
  • 33% of financial services firms use manual checks when onboarding new customers.
  • 35% of financial services firms claimed that using hard copy documents was a more reliable method for establishing ID.
  • 25% of financial services firms claimed they were ‘highly confident’ they could spot a fake document.
  • 29% of financial services firms stated that it takes them up to a week to process hard copy documents.

The whitepaper is part of SmartSearch’s Electronic Verification Uncovered campaign, which aims to raise awareness of the dangers of relying on old-fashioned methods of identity verification for regulated businesses.

Martin Cheek, managing director at SmartSearch said the increase in fraudulent attempts should drive businesses to move away from manual methods. He explained: “The findings of our whitepaper demonstrate a worrying amount of faith in traditional methods. This trust in manually identifying fraudulent documents is particularly concerning, as criminals are using sophisticated methods to try and deceive.

“The increasing complexity of fraudulent documents means anyone reliant on just the naked eye will be leaving their business open to deceit. With record fines being handed out for money laundering failures, regulated businesses need to ensure they are doing everything they can to prevent fraud.

“To prevent money laundering, businesses need to fight fire with fire. As criminals are embracing technology, those aiming to prevent criminal activity need to embrace electronic verification.

“Electronic verification works by using credit reference data, combined with other reliable sources, creating a unique ‘composite digital identity’ which is virtually impossible to fake. SmartSearch’s system can complete a check in just two seconds.

“With the wave of fraud not going anywhere anytime soon, regulated businesses should make the switch to electronic verification as soon as possible.”

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