Half of regulated firms reporting rise in financial crime

Almost half (48%) of regulated firms in the UK have reported a rise in financial crime attempts over the past 12 months, according to new research by SmartSearch.

The anti-money laundering (AML) specialist found that over a quarter of firms (26%) revealed they have even been victims themselves.

A study from SmartSearch, based on responses from 500 regulated businesses in the financial services, legal and property sectors, found that just a quarter (25%) said they have not seen any change in the level of financial crime attempts. Across the sectors, the research indicated that legal firms, including conveyancers, have been hardest hit, with a third (33%) saying they had been victims of financial crime.

There were also significant variations across the regions of the UK with almost two thirds (64%) of regulated businesses in the East Midlands reporting a rise in fraud attempts, as well as 55% in London.

SmartSearch suggested the increase in criminal activity and money laundering has been driven by “gaps in security” that opened up due to the pandemic, as businesses rushed to adapt to new working practices.

“There’s no doubt the conditions since the outbreak of coronavirus have been ripe for criminals to seize the opportunity for money laundering and other fraudulent activities in the property market,” commented SmartSearch CEO, John Dobson. “They have been able to do this because a lot of business’ still rely on manual methods of verification when onboarding new customers.

“Even so, the fact that half of the businesses we surveyed have reported an increase in criminal activity brings home the sheer scale of the problem. The most effective way of preventing this is by switching to a digital solution which does away with the need to riffle through documents which are easily forged by today’s organised crime gangs.”

He added: “The message for regulated business that comes out of these findings is that switching to electronic verification is the smart thing to do, providing confidence through automated perpetual know your customer (KYC) processes.

“If the country is on the brink of another lockdown this winter, it is vital that businesses are not caught out by not having the right tools to avoid business disruption.”

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