The Last Word Comment
Fraudsters are getting smarter: is it time you did?
Regulatory action and in-coming legislation are requiring the industry to look again at how it seeks to tackle fraud
John Dobson Chief executive, SmartSearch
john.dobson@
smartsearchuk.com
Last month, HMRC handed out its highest ever money laundering fine – £7.8m – to a money-transfer business in London. From the sound of it, they had put in
place approximately zero checks or processes and this, as HMRC said, meant they were wide open to criminal activity.
A clear marker By handing out such a big fine, the authorities are setting down a clear marker that they are ready to crack down on firms that do not do what is required of them. Tackling financial crime is a major priority
for governments across the world and that can only mean regulation and enforcement are going to get tougher. The links between money laundering and
the financing of terrorism, drug trafficking, and modern slavery make this a particularly pressing concern, so that anti-money- laundering efforts are now increasingly co-ordinated on a global scale.
Legislation Reflecting this, the UK government has said it will pass legislation to give effect to the provisions of the European Union’s (EU) Fifth Money Laundering Directive (5MLD), regardless of whether we have left the EU
ineffective as more sophisticated criminals are now able to produce high-quality forgeries and fraudulent documentation to create a plausible paper trail. Fake documents are among the main
sources of mortgage fraud, for example: recent research by fraud prevention service Cifas showed that the use of false and altered documents is up by 14% and 32% respectively in the last year.
Technology This is where new technology comes in. SmartSearch was recently named as part of the ‘RegTech100’ list of leading technology firms operating in the regulatory field. We have pioneered the use of fully
Fake documents are among the main sources of mortgage fraud, for example: recent research by fraud prevention service Cifas showed that the use of false and altered documents is up by 14% and 32% respectively in the last year
by the time the implementation deadline is reached in January 2020. More recently, the UK government has let
it be known that it will be paying particularly close attention to the property sector, which is increasingly being targeted by sophisticated money laundering operations. Traditionally, know-your-customer
processes have involved lots of paper-based checks. As well as being costly and time- consuming, this approach is increasingly
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electronic AML checks that cut the time and cost of performing searches, and also make them more secure and effective. On our platform, users can perform a full
individual AML check in seconds and a corporate search in just a couple of minutes, taking in multiple data sources – including international data.
New European regulations The new European regulations mark an overdue but welcome step in the right direction, as they make clear that the secure electronic methods already being widely used by leading financial and professional service firms, should be adopted as an industry-wide standard. It is great news that this will be mirrored in the UK. As the money launderers get smarter,
we all need to get smarter too – not just to avoid potentially disastrous regulatory enforcement action, but so that we know we are doing everything we can to stop these dangerous criminals in their tracks. CCR
November 2019
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