White paper calls for effective Anti-Money Laundering due diligence
Industry leading anti-money laundering specialist SmartSearch has launched a white paper analysing due diligence undertaken by law firms when on-boarding clients.
The report, based upon a survey of decision makers from 500 regulated UK firms – including law firms – reveals that companies are witnessing increased fraudulent activity, yet many are still using outdated procedures to confirm client identities.
Key findings include:
- 41% of law firms in the UK reported seeing a rise in financial crime attempts in the past 12 months.
- 42% of law firms said they use manual checks when onboarding new customers.
- 38% of law firms claimed using hard copy documents was a more reliable method for establishing ID.
- A third (32%) of law firms said they were ‘highly confident’ they could spot a fake document.
- A third (30%) of law firms stated that it takes them up to a week to process hard copy documents.
The white paper is part of SmartSearch’s Electronic Verification Uncovered campaign, which aims to raise awareness of the dangers to law firms of relying on old-fashioned methods of identity verification.
The Know Your Customer (KYC) process has come under increased scrutiny recently as businesses across industries adjusted to working remotely. To ensure regulated businesses can accurately identify and screen clients, SmartSearch is recommending businesses should use digital onboarding.
Martin Cheek, managing director at SmartSearch said the increase in fraud should be an impetus for law firms to move away from manual methods.
Martin explained:
“The findings of our white paper 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 firm 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, law firms should make the switch to electronic verification as soon as possible.”
To read the full results from the white paper, visit here.
Kindly shared by SmartSearch
Main photo courtesy of Pixabay
