The anti-money laundering (AML) software provider commissioned a cross-sector survey, for which decision-makers in 500 regulated UK businesses across the legal, property and finance sectors were questioned on a range of AML compliance issues.

The survey is the second in SmartSearch’s continuing Electronic Verification Uncovered campaign, which aims to make financial firms aware of the dangers of relying on flawed, old-fashioned methods of identity verification.

According to the results, 70% of property firms, 34% of finance and banking companies, and 47% of legal sector firms have not changed their approach to onboarding new customers since sanctions were imposed on Russia after its invasion of Ukraine.

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The gaps in new customer checks were compounded by some firms’ continued reliance on hard-copy documentation to verify new clients’ identities. 

Almost half (45%) of property firms surveyed said they were using documents like passports or utility bills to identify new clients — even though 14% of them admitted they were not confident in their ability to spot a fake. 

A fifth of financial firms and 23.5% of legal companies also relied on manual checks, despite their similar lack of confidence in identifying fake documents — confirmed by 16% of financial and banking companies, and 10% of legal firms.

Martin Cheek, managing director at SmartSearch (pictured above), said: “Our latest survey shows the worrying size of the challenge when it comes to closing the AML loopholes being exploited by criminals. 

“As the government increases its censures on companies for breaching compliance rules, some are continuing to risk fines and reputational damage by either failing to increase their surveillance in the light of sanctions, relying on outdated manual checks, or both. 

“Such firms are unwittingly exposing themselves and the UK to the proceeds of some of the world’s worst crimes — people trafficking, drug running, tax dodging and scammers who prey on the most vulnerable.

“Regulated businesses need to ensure they are doing everything they can to prevent these crimes and the only way to do so is to embrace electronic verification (EV), which uses credit reference data, combined with other reliable sources, to create a unique ‘composite digital identity’ that is virtually impossible to fake. 

“Not only that, a system like SmartSearch’s can complete a check in just two seconds.”