Regulated firms waste hours on manual identity checks

Regulated firms using manual methods of verification to onboard new individual customers are wasting hours of business time in the process, new data shows.

And many of them also acknowledge that those manual checks are less secure.

A quarter of 500 decision-makers at firms in the finance and banking, property and legal sectors who took part in a survey by leading anti-money laundering (AML) software provider SmartSearch, said they verified new customers using manual checks with hard-copy documents such as passports and utility bills.

But they also admitted that those documents took them days or even weeks to process – depending on transit and response times. And only a third (33 per cent) said they felt confident about being able to identify a fake document such as a passport, driving licence or utility bill.

More than half said the process could take from two days to a week. And one in eight of them (12 per cent) said checking the documents took more than a week.

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

The survey is part of SmartSearch’s continuing Electronic Verification Uncovered campaign, which is calling on regulated businesses to switch to electronic verification (EV). Digital onboarding is more reliable and can be done in as little as a few seconds.

Martin Cheek, SmartSearch managing director said of the survey’s results: “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.

“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 electronic verification (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.”