Property and finance services firms 'among the most vulnerable'
New findings from digital compliance firm SmartSearch have unveiled a concerning trend among regulated firms, with 92% failing to conduct daily monitoring of clients.
The survey, encompassing 501 compliance decision-makers, suggests a significant gap in daily customer due diligence (CDD) practices across various sectors.
Under UK law, regulated firms are obligated to identify and verify individuals and businesses they engage with, aiming to prevent inadvertent involvement with sanctioned entities or those associated with financial crime. However, the latest data suggests a widespread neglect of this protocol, potentially leaving firms vulnerable to possible sanctions breaches and money laundering risks.
The survey reveals distinct sectors at heightened risk, with the property sector emerging as the most vulnerable, followed closely by the financial services sector. Notably, 95% of property firms and 94% of finance firms neglect daily checks, according to the investigation.
Read more: Emerging finance firms fall prey to financial crime
SmartSearch is a provider of anti-money laundering (AML) software and has over 6,500 client firms and 60,000 users in both domestic and international markets.
Its managing director, Martin Cheek (pictured), highlighted the escalating challenges posed by financial crime sophistication and mounting regulatory pressures, as well as noting the gravity of non-compliance.
“Everyone is so busy that it can be a real challenge for firms to comply with the law while mitigating financial and reputational risk for them and their clients,” said Cheek. “People in regulated businesses are genuinely worried that a breach of financial sanctions could be considered a criminal offence worth seven years in prison.”
SmartSearch advocates for real-time data utilisation and continuous monitoring to mitigate risks.
Have something to say about this story? Leave a comment below.
