More than a third of firms in emerging finance sectors admit that they have been a victim of financial crime – including money laundering, in the past six months, data from SmartSearch has revealed.
According to the survey of over 500 compliance decision-makers in banks, challenger banks, crypto platforms and property developers, 11% of businesses reported annual total costs of over £20,000, while 3% reported costs in excess of £100,000.
The SmartSearch data found that banks were the biggest victims, with more than 40% of all banks surveyed falling foul of financial crime and/or money laundering.
Within banking, the number of challenger banks (46%) slightly edged out traditional high-street banks (40%) in making the admission.
Martin Cheek (pictured), managing director of SmartSearch, said: “There’s no question financial crime can have massive implications for businesses.
“It’s not just the loss of revenue, it’s also the reputational damage and the questions it raises for regulators and authorities about the safeguards and compliance measures in place.
“That’s especially true if businesses are not properly verifying customers – as our survey has revealed.”
He added: “As the threat of money laundering and financial crime increases, and the burden of compliance grows even heavier, firms must take action and improve both their systems and their processes to avoid becoming victims too.
“Advancements in digital compliance are helping firms of all sizes mitigate these challenges by not only identifying potential red flags as part of detailed checks, but providing constant access to real-time data and intelligence.”
The survey is the third in SmartSearch’s continuing Electronic Verification Uncovered campaign, which aims to make firms aware of the dangers of relying on flawed, old-fashioned methods of identity verification.
The campaign argues that businesses should use digital compliance to ensure they properly identify and screen clients – as recommended by the Government in the 2020 Money Laundering and Terrorist Finance Act – to stem the flow of dirty money into the UK and protect firms from the fines and reputational damage which come with breaches.
