Agents are ‘wrongly’ relying on hard copies of identity documents to verify people’s identities in anti-money laundering (AML) checks, new research warns.
Analysis by AML platform SmartSearch found almost two thirds of regulated firms believe hard copy documents provide reassurance a customer is genuine.
SmartSearch surveyed 500 businesses that are regulated for AML including estate agents and firms in the property, legal, banking and finance sectors.
Despite questions of validity, nearly half of all firms questioned still use hard documents like
passports, IDs and utility bills in some way to verify new business customers, despite more than 83% being aware of digital systems for electronic verification (EV).
The data also highlights the North East and the East of England as hotspots with more than 40% of firms relying on manual verification alone.
Meanwhile, the same number of regulated firms in the South East believe manual verification is the only way to truly guarantee a person’s ID.
The findings come as passports continue to be the most attacked form of identification.
There was a 41% increase in ID fraud during 2020, generating losses of $712bn and fresh opportunities for money laundering and serious organised crime, SmartSearch said.
Martin Cheek, managing director of SmartSearch, said: “With the number of fakes and forged documents rising - no doubt helped by criminals looking to circumvent growing sanctions, the latest data should sound alarm bells to businesses who wrongly believe hard copies are secure.
“This reliance on flawed manual checks is even more worrying as our data reveals many businesses aren’t confident enough to spot a fake. If there’s ever been a case for switching to a digital system and adopting electronic verification, now is certainly the time.”
Cheek said going digital and improving compliance must move higher up the agenda for businesses, especially in the current climate.
He added: “Even if it’s not for sake of efficiency but as regulators continue their crackdown and the number of hefty fines increase.”
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Have you ever seen a fake passport?
That was the question I would regularly ask solicitors in meetings after finding out they didn't use electronic AMLID checks.
My reply was usually "No, thats because they are bloody good and cost £10,000's of buy".
Aside from that, having to physically 'see' a client in todays world when you have electronic checks, facetime/video call options available to speed up the process is crazy.
Oh and hence why 'some' solicitors complain about being 'too busy'...
This whole subject is ridiculous, the Gov want estate agents to prove ID, yet 1200 people a day can float in on a dinghy with no passport or possibly even a fake one! and they do nothing. Prevention and all that.
One day someone will define what the absolute minimum is necessary to comply. It seems to always be more, more more.
I have said the following before, but we are only duplicating what solicitors do anyway; so ultimately we are just a fall back for the maybe, one in ten thousand bent solicitors. We need to get rid of this red tape, not have more.
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