Regulated firms who use manual verification methods to verify, and sanctions-check customers are burdening their businesses with unnecessary extra cost, an anti-money laundering (AML) expert has warned.
Manual checks are also leaving companies open to potential fines and reputational damage if they breach AML or sanctions rules said Martin Cheek, managing director of SmartSearch, the UK’s leading digital compliance and AML software platform.
Mr Cheek said: “At a time when our challenging economy is forcing firms to look at their costs, verifying customers with manual checks is the least cost-effective way for regulated companies to be compliant.”
A SmartSearch survey of 500 decision-makers at regulated firms saw a quarter admitting to using hard-copy documents such as passports and driving licences to verify customers – while also acknowledging that the process took days or even weeks to complete and that it was less secure.
Martin Cheek commented: “The inefficiency and unreliability of using manual processes to verify new customers is burdening businesses with unnecessary extra cost at a time when they can least afford it.
“Meanwhile, as regulated firms persist with these time-consuming, flawed processes, overseas money continues to be washed through the UK economy.
“It is time for regulated firms to wake up to the fact that electronic verification (EV) is the most robust and cost-effective way to screen new, and existing, clients.”
Firms who have invested in EV are seeing its cost and time-saving benefits.
For the legal department at Persimmon Homes, EV is as much about speed as it is security: “There are many reasons why we chose SmartSearch to be our AML provider. One reason is the increased pass-rate due to the dual-bureau system they have in place. The dual-bureau system means there is more chance we will be able to obtain a ‘Pass’ result, so we can onboard our customers in the click of a button. Since joining SmartSearch all our users have noticed how much the pass-rate has increased which has significantly sped up our processes.”
Martin Cheek commented: “The areas of unnecessary extra cost go beyond just service fees. When your capacity to complete a verification optimises from days to just seconds, your team is increasing the amount of time it spends on business. You have happier customers and more completed deals.
“And when it comes to sanctions compliance, potential breaches are even more costly and time-consuming. As well as the fines and reputational damage, dealing with investigations by the regulator takes up a lot of management time.”