SmartSessions: Revolutionising AML with Source of Funds

This session features Oliver Telfor and Kyle Furness discussing how Open Banking is transforming the traditionally manual process of Source of Funds (SoF) verification for Anti-Money Laundering (AML) compliance.

They explain how the digital, mobile-first solution connects directly to a house buyer's bank account, providing verified, real-time data that drastically reduces the process from potentially 30 days to just 30 minutes. Key benefits include enhanced security, reduced risk of tampering, and simplified handling of complex cases involving gifters or overseas funds. The discussion also highlights Smart Search’s robust partnership with Armalytix to deliver this best-in-class solution.

Transcript

Oliver Telfor: Hi, welcome to SmartSessions of Podcast by SmartSearch, where we talk all things AML regulations and everything that sits within our world. Today we're gonna talk about something quite niche and different, which is called Open Banking, and to support me on this conversation, I've got one of our product team with us here today, Kyle. So if you can introduce yourself and we'll sort of get into the show.

Kyle Furness: Hi. Yeah. So I'm Kyle Furness and I'm one of the product owners here at SmartSearch. I've worked here a little over a year and done a couple of initiatives, more recently, Source of Funds implementation with our partner Armalytix.

Oliver Telfor: So before we get into all the sort of Source of Funds and everything like that, for those who are not aware of what Open Banking is, how does it differ to sort of a Source of Funds generator and how is it used within our world, basically?

Kyle Furness: Okay. So if you think of traditional methods of verifying the origin of funds for somebody who might be making a property purchase, the traditional method for that is very manual. So it involves quite a lot of back and forth between a case handler in a law firm, maybe a fee earner, and the client making the property purchase. The journey can be quite fragmented in that the law firm needs to request all of this evidence manually from the client, and the client might not have all of that available. So they need to gather all of that. It can be a bit back and forth. They send it back to the law firm and there's gaps in the evidence, so they need to go back and request more. And that can really extend the process. Where Open Banking comes in, it sort of removes that friction and connects directly with the house buyer's bank account and sweeps the data from there so that we're getting the data directly from the source.

Oliver Telfor: Perfect. So in terms of our world, so like Anti-Money Laundering and due diligence, it sounds pretty straightforward, like, you know, you can see the connection to the bank account, see the connection to the customer, and that's from where it is. But how does it work from an Anti-Money Laundering protection perspective?

Kyle Furness: So it provides real-time access to the verified data, meaning less manual chase and fewer errors. And a smoother experience, but it does also ensure that you are complying with the relevant AML regulations. Sure. So it is a crucial AML requirement that in property transactions, law firms do verify the origin of funds being used to make that purchase.

Oliver Telfor: So from a Source of Funds perspective, how do we use Open Banking to sort of use for businesses and how does that then benefit the businesses who are wanting to use Open Banking for Source of Funds?

Kyle Furness: So, businesses are using traditional methods to verify the origin of funds, have that lengthy back-and-forth process. So by implementing a digital Source of Funds product, it means that you can get that data directly from the source and reduce that back and forth with the client. And also satisfy your clients a little bit more as well. 'Cause you can imagine there's a sense of urgency to get their purchase finalised. It can be a lengthy process anyway, so removing that additional barrier and getting through to completion quicker. It also reduces the effort made by the fee earners and all of the case handlers who might spend a lot of time chasing fragmented evidence.

Oliver Telfor: And so, I mean, we talked about speed there and chasing up in terms of what that actually speed looks like. You know, where are we taking a process that might take 30 days into half an hour process with our solution? And then just sort of pairing in with that, with the accuracy with it. So we're making sure that everything that we've got is accurate and it's not actually we are missing document 1.2. Can we sort of find that? How does that process basically enable our clients to have a much better service?

Kyle Furness: Okay. So in terms of the journey that the house buyer would go through, it's sort of verified throughout the journey. The client would be unable to submit an incomplete Source of Funds report without providing all of the necessary information within that. So if they don't have it all to hand, they can knock out and back in. But it just makes sure that everything is received before it's sent back to the law firm, which then enables the law firm to see in one place all of the transactional activity and all of the evidence necessary to support that property purchase.

Oliver Telfor: With our solutions here at Smart Search, we try and take this digital-led approach and digital-first approach now with our Source of Funds. It is very much a mobile-led approach. Can you just talk us through what that looks like from a Source of Funds perspective?

Kyle Furness: Yeah, absolutely. So the Source of Funds search would be initiated in the Smart Search platform. So in search forms that our clients may already be familiar with, we are making incremental improvements to enhance that experience when using our platform. But the Source of Funds journey that the end client goes down is designed mobile-first. So it's an intuitive flow that guides the person making a purchase, verifying their funds, through the process in a mobile-friendly way. It's also adaptable to be on a desktop as well so that anybody can go through the journey with ease.

Oliver Telfor: So beyond Source of Funds, what are the compliancy areas and due diligence does Open Banking cover, and what are the other benefits?

Kyle Furness: So the Open Banking integration or Source of Funds integration can cover other use cases beyond just a residential property purchase. So it might be that there's other kinds of purchases being made where a person needs to verify the origin of their funds. That might be, you know, a high-value car or piece of art. But additionally, outside of sort of verifying the origin of funds, there is also Open Banking technology that allows you to verify the activity of an individual before making your decision to provide a service to them. So that might be an affordability assessment for a financial services who wants to ensure that before giving the proceeds to this person who needs to repay them, actually has the means to repay them.

Oliver Telfor: That makes sense. Fair enough. Okay. So away from then, sort of property and sort of Source of Funds perspective, other than those benefits, what benefits in terms of due diligence does Open Banking provide our clients?

Kyle Furness: So just that it's directly from the source. So it removes the risk of tampering. With information, it's come directly from the source, it's consent driven, so the person sharing the information needs to go in there and physically consent to that data being shared with the relevant third party for the purchase or any other reason that they're doing a Source of Funds check.

Oliver Telfor: So how does Open Banking fundamentally impact the business? And so what are the benefits for the business and for their clients?

Kyle Furness: In the context of a Source of Funds verification? The Open Banking implementation just ensures that we are getting that data directly from the source. It can take a lot of time to gather manual evidence, you know, from bank statements, requesting them from the bank and either posting or emailing them, not to mention it's not as secure. So it ensures that security there, but also enables businesses to handle very complex cases in a simple workflow. So regardless the complexity of the case, whether there's a gifters involved or if funds originated overseas, what the fee earner within law firm would do is just look at all of that evidence in one place. So it's connected with Open Banking to get data right from the source. It's got the supplementary evidence in that, including the details of any third parties who may be involved in the process. So it reduces, again, that back and forth with the client just gives them everything they need in one journey. Perfect.

Oliver Telfor: Okay. So moving towards our solution. So, and, and how we're sort of betting Source of Funds into our offering. Can you just talk a little bit about what that offering looks like and sort of who we're working with?

Kyle Furness: Yes. So we've chosen to partner with Armalytix as our Source of Funds, Open Banking provider, being the best in class in the market, and endorsed by the Solicitors' Regulation Authority (SRA). And their technology is authorised by the Financial Conduct Authority (FCA) as well. So it just gives us that peace of mind knowing that we've partnered with the best in class, and it gives our clients a peace of mind that they have a robust solution that will give them everything they need to complete the process within a property transaction, whilst complying with the necessary regulations. Perfect.

Oliver Telfor: So you could say that we've covered almost every base. Yes. Perfect. Okay. So Kyle, thank you for taking the time today, and that was a good overview of banking and our Source of Funds feature. And if you want to know more about our Source of Funds feature and other solutions that we provide within SmartSearch, head to smartsearch.com, and you can see the full scope there. If you have any questions about Source of Funds, if you're a current client of ours, make sure you contact your customer success manager and they'll be able to give you more details about this. And we can request a free demo on our website as a prospect or as a current client to see how Source of Funds can benefit you. Until next time, take care.