The Analysis Comment


Doing your duty?


Electronic verification systems are the future if we want to combat the growing anti-money laundering problem


Martin Cheek Managing director, SmartSearch martin.cheek@smartsearchuk.com


In July, the Treasury Select Committee met with Donald Toon, director of prosperity at the National Crime Agency, and Mark Thompson, interim director of the Serious Fraud Office, to discuss the issue of money laundering. During the hearing, the pair admitted that


money laundering in the UK is “a very big problem” that it is most likely getting worse, and conceded that hundreds of billions of pounds are laundered through the UK every year. They also admitted that, while money


laundering is obviously a huge issue, with so many legitimate transactions going through the UK financial systems, it is becoming more and more difficult to track fraudulent activity.


In the spotlight So, with AML in the spotlight more than it has ever been before, it has never been more important for firms to ensure they have appropriate AML systems in place. Sadly, that is easier said than done,


Notable update One notable update on the fourth MLD states that customer due diligence measures should identify the customer based on information from a ‘reliable and independent source’, ‘including, where available, electronic identification means’. This implies that not only will the source have to be reliable and independent, it will also have to be electronic. And, while we welcome this amendment,


we are not sure it goes far enough. As I said earlier, because fraudsters are getting so good at producing fake identification documents, electronic verification is the only way to catch them out. This means that the only sensible response


because as with all types of criminal activity, money launderers are becoming ever more sophisticated and employ a wide range of techniques to clean their dirty cash. Money launderers have operations all over the world, wrapped up


in so many different layers of activity that many have become almost impossible to detect. This means that, even when firms do have AML controls in place,


keeping on top of the fraudsters is becoming increasingly difficult. Fraudulent documents, such as passports and driving licences used to launder money and make fraudulent transactions are now so sophisticated, that manual checks are struggling to spot the fakes. This is why there are still billions of pounds worth of transactions


going through the UK financial system every year, funded with dirty money. The fifth revision of the Money-Laundering Directive (MLD) came into force in July.


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criminal activity, money launderers are becoming ever more sophisticated and employ a wide range of techniques to clean their dirty cash


Sadly, that is easier said than done, because as with


all types of


is not to just say electronic identification should be used ‘where possible’, but actually that electronic identification should be mandatory. Electronic identification is the most


reliable, secure and efficient source of information for identity solutions. If all checks were done electronically, it would remove the risk of errors as a result of manual checks. By using an electronic AML platform, lenders and other credit professionals can


validate documents and make electronic identification verification through one system. Not only is this quicker and easier than manual checks, but it is also much more reliable, as it can match documents with information from major data suppliers like Experian, Equifax, Dow Jones and Companies House. Last month’s Treasury Committee meeting made one thing quite


clear; not enough is being done to tackle money laundering in this country. The head of the committee accused the NCA and Serious Fraud


Office of offering “more excuses than explanations” and said he felt “the urgency of the matter is not being appreciated”. So it is our duty to use the technology we have to fight money laundering in the best way we can. CCR


www.CCRMagazine.com October 2018


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