Research finds majority of firms in these areas did not exercise due diligence in onboarding new customers
Northern Ireland has been identified by a recent study as the UK’s most vulnerable area for dirty money.
Anti-money laundering (AML) software provider SmartSearch has commissioned a survey of decision-makers in 500 regulated UK businesses across the legal, property, and finance sectors, asking them questions on a range of AML compliance issues.
The survey results show that in Northern Ireland, around seven in 10, or 71%, of those who responded had not changed their approach to onboarding new customers since sanctions were imposed on Russia after its invasion of Ukraine. Even more (85%) had not changed their approach to monitoring existing clients since the start of the war.
A report this year by the commons foreign affairs committee revealed that the government was still failing to tackle Russian kleptocrats who were laundering cash illegally through the UK – claiming that some of it was being used to finance Russian president Vladimir Putin’s war. Since the invasion, around 7,200 individuals and 1,250 entities have been added to the thousands of sanctions already affecting Russia since the war in Ukraine began.
Other regions most vulnerable to money-laundering, based on the survey results, included the South West and the West Midlands, where more than half (58%) of the regulated firms who responded had not increased their checks.
Wales was revealed as the part of the UK most likely to stop individuals from laundering dirty money, with nearly three quarters (72%) of regulated firms in the country increasing checks on clients since the war began. Firms in London and Yorkshire were almost as vigilant, with more than six in 10 (63%) upping their checks on new customers since the start of the war.
“These shortfallings are a far cry from proper due diligence, and it’s no wonder that criminals and kleptocrats are taking advantage of these loopholes to wash their money in the UK,” Martin Cheek (pictured), managing director at SmartSearch, commented.
“Electronic verification is the only robust way to monitor new and existing clients – it can even retro-screen them. It is the most effective way for firms to show they have sought to avoid sanction breaches and the fines and reputational damage which come with them.”
The survey is part of SmartSearch’s continuing Electronic Verification Uncovered campaign, which aims to make regulated firms aware of the dangers of relying on risky and old-fashioned methods of identity verification.
