Many regulated firms in the UK are wasting hours of business time by using manual methods of verification to onboard new individual customers, new research has shown.

A study by anti-money laundering (AML) software provider SmartSearch indicated that many of these firms have also acknowledged that such manual checks are less secure.

SmartSearch surveyed 500 decision makers at firms in the finance and banking, property and legal sectors, and found that around one in four firms had verified new customers using manual checks with hard-copy documents, such as passports, driving licenses or utility bills.

However, they also admitted that those documents took them days or even weeks to process – depending on transit and response times – while only a third (33%) said they felt confident about being able to identify a fake document.

The findings come as forged documents are becoming increasingly sophisticated and harder to identify. Guidance from the Home Office on checking for forgeries of official documentation lists 24 potential failure points, many of which require expert knowledge to identify.

SmartSearch managing director, Martin Cheek, said: “These 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.”

The survey by SmartSearch also forms part of a campaign in which the AML software provider is calling on regulated businesses to switch to electronic verification (EV).

Cheek added: “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 EV 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.”

Share Story: