SmartSearch’s 2023 annual survey, involving 500 compliance stakeholders, has revealed that 36% of people in regulated sectors express a lack of trust in electronic ID verification, preferring manual checks instead. This rate, which has doubled since 2022, poses a risk of increased exposure to financial crime, warns anti-money laundering experts.
Fraser Mitchell, technical director at SmartSearch, said: “This indicates a significant dip in trust for electronic ID verification technology. And yet it is recommended as part of the due diligence process in the Money Laundering and Terrorist Finance Act 2020.
“We believe many regulated firms may be unaware of this advice, hence the mistrust. In the meantime, criminal gangs are washing billions through the UK’s financial systems. It’s a real concern.”
The survey also found that 87% of those who use manual methods for ID verification are overly confident in their ability to identify fake documents, such as passports or utility bills. This misplaced confidence varies across different sectors, with the highest levels noted in property and financial services.
In the property sector, trust in electronic ID verification fell dramatically, with 56% of professionals expressing distrust, a significant increase from 13% in 2022. Similarly, in financial services, 40% of stakeholders now mistrust the technology, up from 20% the previous year.
Nicola Gifford, general counsel at SmartSearch, emphasised the importance of fostering trust in electronic ID verification: “Due diligence processes are critical to helping regulated firms mitigate risk – both financial and reputational. So it is important that we help engender trust in electronic ID verification within these businesses.
“This is our third ‘Electronic Verification (EV) Uncovered’ campaign. Our objective is to address common misconceptions among regulated firms, with a view to lowering the barrier to businesses adopting EV as standard practice.”
