"As regulators fine and name and shame an increasing number of firms, the worrying weight of compliance is clearly playing on the minds of property developers"
Concerns over AML breaches have been revealed in a new survey of 500 compliance decision-makers in banks, challenger banks, crypto platforms, property developers and gaming outlets by SmartSearch who found that 27% are “very worried” about the robustness of their compliance procedures.
The findings show that, of all the firms surveyed, property developers are the most worried about breaking compliance regulations. Corruption watchdog Transparency International UK has calculated that £6.7bn of suspicious funds has been invested in UK property since 2016.
However, despite their concerns, many property developers also admit to a continuing reliance on flawed manual processes to verify customers. 46% said they verified new individual and business clients manually - wrongly believing that copies of official documents like passports or driving licences provided “reassurance” that customers were genuine.
In fact, official documents are easily forged by sophisticated criminals and, by not verifying them, firms are making themselves vulnerable to the breaches they are worried about committing.
Martin Cheek, managing director of SmartSearch, said: “As regulators fine and name and shame an increasing number of firms, the worrying weight of compliance is clearly playing on the minds of property developers.”
The survey is the third in SmartSearch’s continuing Electronic Verification Uncovered campaign, which aims to make regulated firms aware of the dangers of relying on flawed, old-fashioned methods of identity verification. The campaign argues that regulated businesses should use digital compliance to ensure they properly identify and screen clients - as recommended by the Government in the 2020 Money Laundering and Terrorist Finance Act - to stem the flow of dirty money into the UK and protect firms from the fines and reputational damage which come with breaches.
Martin concludes: “What’s concerning about our survey is that it shows that a significant number of these firms have concerns about being vulnerable to an AML breach but aren’t doing anything to mitigate the risk - even though the regulators are more likely to enforce the rules and crack down on breaches. Breaking the regulations unintentionally is not a defence. Property developers should be investing in a digital compliance solution to protect themselves from the potentially eye-watering fines and considerable reputational damage which accompany a breach.”
