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SmartSearch finds critical business verification checks neglected by regulated firms.

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TLDR:

  • SmartSearch survey reveals regulated firms are neglecting critical business verification checks
  • Over half of firms do not complete verification checks on new business clients

The latest survey from digital compliance specialists SmartSearch has highlighted a concerning trend among regulated firms who are neglecting critical business verification checks. The survey found that over half of the firms questioned admitted to skipping this crucial step, despite clear regulatory requirements to do so. In particular, property firms, including estate agents, were the most likely to skip verification checks on new business clients, with 65 percent of firms admitting to this practice.

Across the legal, finance, and accountancy sectors, similar results were reported, with around 58 percent of respondents not always verifying identities. Additionally, only 37 percent of regulated firms identify the ultimate beneficial owners (UBOs) as part of these checks, a drop from the previous year’s survey.

Martin Cheek, managing director of SmartSearch, emphasized the importance of KYB processes and the need for firms to take action in order to protect themselves from financial crime and regulatory intervention. Technology advancements can help streamline verification processes and assist firms in completing these critical checks.

The survey also highlighted the importance of UBO checks and robust Know Your Business (KYB) procedures, especially in light of recent research showing the UK as number one in the world for shell company-related risks. With nearly five million red flags, the need for thorough verification checks has never been more critical in order to mitigate risks and comply with AML regulations.

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