A recent survey has unveiled a concerning trend among UK regulated firms; a significant number are neglecting essential verification checks on individuals behind new business clients. SmartSearch’s data reveals that 59% of regulated firms fall short in consistently executing these critical checks, which are compulsory under UK anti-money laundering regulations.
Alarmingly, within the property sector, 65% of firms acknowledge the omission of these vital verification procedures. The report highlights a similar pattern in legal, finance, and accountancy sectors. Moreover, there’s been a noticeable decline in identifying ultimate beneficial owners, with only 37% of regulated firms doing so, a decrease from 53% the previous year.
This complacency can have dire consequences, as illicit actors often utilize complex corporate structures and shell companies to launder funds through seemingly legitimate businesses. With the UK leading in shell company-related risks globally, according to Moody’s Analytics, the stakes are high for UK firms.
Martin Cheek, managing director of SmartSearch and a qualified lawyer, emphasised the gravity of robust Know Your Business (KYB) procedures. “While KYB processes are complex, they are essential to mitigate significant risks firms face,” Cheek said. He advocates for leveraging technology to streamline compliance and prevent regulatory scrutiny.
SmartSearch’s digital compliance solutions offer a comprehensive approach, including checks against Companies House, financial summaries, and enhanced due diligence. Their platform, serving a broad clientele, including half of the top 100 accountancy firms and a third of the top 200 legal firms, facilitates informed business decisions and is a bulwark against the inadvertent facilitation of financial crime.
