Digital compliance unmasks illicit funds with source of funds feature 

by | Sep 14, 2023

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Regulated firms struggling to keep pace with criminals who disguise the illegal source of their funds can now identify potentially dirty money in just one minute thanks to powerful new technology.  

Leading UK digital compliance provider SmartSearch has developed it’s Source of Funds solution as part of its recently launched enhanced platform. 

As part of a risk-based approach, regulated firms are advised to verify the source of funds when carrying out financial transactions for clients. However, money-laundering criminals – and those seeking to circumnavigate sanction restrictions – often exploit this “problem area” process to hide their dirty money.  

 
 

The proceeds of Crime Act requires regulated firms to submit a Suspicious Activity Report (SAR) to the National Crime Agency (NCA) if they believe that someone is trying to clean dirty money earned from the proceeds of crime.  

The number of SARs submitted has doubled in the last five years and the NCA has estimated that it will hit a million for the first time this year.  

SmartSearch managing director and qualified lawyer Martin Cheek said: “Source of funds checks are a problem area for regulated firms because the legal framework around them is still poorly understood.  

 
 

“For example, it is often incorrectly assumed that funds transferred from a bank should be classed by default as clean money. That is not the case.  

“Some also wrongly believe that they do not need to check a customer’s source of funds after their identity has been verified when, in fact, they do.  

“These extra checks add to the increasing weight of compliance that many regulated firms are buckling under. Our development team has worked with our clients to develop this source of funds technology to help lighten that load.” 

 
 

Through key partnerships SmartSearch is able to harnesses the power of open banking technology, allowing its users to run checks for source of funds, proof of funds, source of wealth and source of income – either as part of a wider search or as a standalone check. 

With minimal input from the client, the check is completed in just 60 seconds, while the ability to review bank transactions remains live for 90 days. 

Martin Cheek added: “Source of funds checks can prove instrumental in the fight against money laundering.  

 
 

“We are proud to provide businesses with a powerful tool that not only uncovers the true origin of funds but also disrupts the activities of criminals. With the source of funds feature, SmartSearch continues to lead the way in delivering comprehensive compliance solutions.” 

The recently enhanced SmartSearch platform continues the company’s decade-long mission to provide regulated firms with anti-money laundering (AML) compliance solutions. Its technology is trusted by more than 6,000 clients and 55,000 users. In addition to more than 2,000 financial services firms and over 1,000 property firms, these includes one in two of the top 100 accountancy firms and one in three of the top 200 legal firms. 

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