Many of them also admit manual verification is less secure
One in four regulated firms are still using manual methods of verification to onboard new individual customers, wasting hours of business time in the process, according to anti-money laundering (AML) software provider SmartSearch.
A quarter of 500 decision-makers at firms in the finance and banking, property, and legal sectors who took part in a survey by SmartSearch said they verified new customers using manual checks with hard-copy documents such as passports and utility bills.
They also admitted that those documents took them days or even weeks to process – depending on transit and response times. More than half said the process could take from two days to a week, while one in eight, or 12%, said checking the documents took more than a week.
SmartSearch also noted that many of them also acknowledge that those manual checks are less secure. Only a third, or 33%, of the respondents said they felt confident about being able to identify a fake document such as a passport, driving licence, or utility bill.
The software company said forged documents were becoming increasingly sophisticated and harder to identify. The Home Office’s own guidance on checking for forgeries of official documentation lists 24 potential failure points, many of which require expert knowledge to identify.
Commenting on the results of the survey, Martin Cheek (pictured), managing director at SmartSearch, said that the figures underline the inefficiency and unreliability of using manual processes to verify new customers.
“They also show that while regulated firms persist with these time-consuming, flawed processes, ‘dirty’ money will continue to be washed through the UK economy,” Cheek stressed. “Electronic verification (EV) combines credit reference data with other reliable sources and is almost impossible to fake. The 2020 Money Laundering and Terrorist Finance Act even recommends that regulated firms use electronic verification as part of their due diligence to make it as effective as possible.
“Using EV doesn’t just minimise the risk of breaching AML rules, it also makes the firms’ own customer journeys more efficient, helping those who use it to stand out from their competitors.”
The survey is part of SmartSearch’s ongoing Electronic Verification Uncovered campaign, which is calling on regulated businesses to switch to electronic verification. SmartSearch has been promoting digital onboarding as more reliable and less time consuming – it claims it can be done in as little as a few seconds.