In this episode of SmartSessions, Host Oliver Telfor sits down with Sophia Sulaman, Product Director, for a deep dive into our upcoming product launch: Source of Funds.
For many businesses, verifying the origin of client funds remains a manual and risky process. Sophia discusses how SmartSearch is changing that by transforming this critical step into a seamless, automated, and secure part of your compliance workflow.
The conversation covers:
Whether you're in the legal, property, or finance sector, this episode offers essential insights into how you can Automate Source of Funds and Eliminate Risk.
Episode Guests: Sophia Solomon (Product Director) Host: Oliver Telfor
Oliver Telfor: Hi, welcome to SmartSessions, a podcast by SmartSearch where we talk about all things AML, RegTech, and everything regulatory that affects our worlds and our clients' worlds. Today we're going to be talking about Source of Funds, and I'm going to be joined by Sophia from our product team. So, tell us about what source of funds is and actually what we use it for. Sophia, introduce yourself and then we can get into the show.
Sophia Solomon: Hi, I'm Sophia Solomon. I'm the Product Director at SmartSearch.
Oliver Telfor: Perfect. So for those who don't know, let's just start from the top. So, what is source of funds?
Sophia Solomon: Source of funds essentially is verifying the legitimacy of the origins of funds for a given transaction. So, for example, if you're purchasing a new property and you say that 20% of that funding is coming from a gifter, it's being able to prove that that was a gift, and the gifter being able to prove that their funds were from a legitimate source.
Oliver Telfor: Okay. I mean, that makes perfect sense. I've sort of bought a house recently, so I understand going through various steps in terms of "where did it come from, is it a gift?" and me giving bank statements and proving again who I am, but also where the money comes from. So this is something that's existed in AML for quite a while now and sort of another product that SmartSearch is rolling out. So why are we doing it now and what are our clients expecting from this launch?
Sophia Solomon: At the moment, the validation of these sources of funds is actually very manual and time-consuming. And the request that's come in from our clients is for a level of automation.
Oliver Telfor: So what is the current process in terms of time and what businesses are doing at the moment?
Sophia Solomon: So at the moment, the processes are very manual and they're very time-consuming. Essentially you have lots of phone calls back and forth asking for information, letters being sent in the post, emails being sent with bank statements, et cetera. So it's very time-consuming and very lengthy.
Oliver Telfor: And I guess from an operation perspective, if you are that business, you know, you are coming to work to do 'X,' you don't really want to be spending time doing 'Y,' and 'Y' in this case is chasing up paperwork that should actually be automated. How does our solution cut that out, but also from a business perspective, how much of a headache must that actually be?
Sophia Solomon: Yeah, you're absolutely right. A number of our clients have said that a large proportion of time that should be chargeable is then being spent chasing administrative tasks, which is not great for their business. They're spending time doing administrative tasks as opposed to being able to work on chargeable items.
Oliver Telfor: And other than helping businesses win business through identities, which is kind of what we do, another element of this is at its most basic means SmartSearch is here to help you grow your business. You know, although compliance and AML regulations exist for a reason, it shouldn't be seen from a business perspective as another piece of red tape. So this is Source of Funds is yet another example of how we can step in and help them get around that—maybe not get around it—but definitely reduce the time spent on red tape and compliance. So we've talked about why we want to do it and why clients have definitely asked us to do it, but how is this going to work? How is our solution going to help them?
Sophia Solomon: Our clients send a link to their clients who are taken through a guided, structured journey. They'll know what they need to provide and why. So it's important for them to understand what information's being asked and for what purpose. So that's the first thing. The second thing is that they're also able to securely and quickly share access to validated bank information through a secure, integrated open banking.
Oliver Telfor: Perfect. I mean, that makes sense from our perspective, and we've covered the value for our clients in terms of, you know, not chasing as much, it's a much more speedy and frictionless exercise for them. And they can go back to doing what they do best with their business rather than doing these admin tasks. In terms of the benefits then for their clients, what does that value look like for them and how does that customer-facing perspective work?
Sophia Solomon: First of all, their clients, our clients' clients, understand exactly what's needed and why. There's no uncomfortableness. They're filling in a questionnaire. It's very easy, very intuitive for them to answer those questions. The journey's also very seamless as it takes them into their secure open banking integration as well to be able to supply the evidence that's needed. So it's just that smooth journey, no back and forth or missed questions. It means that they complete the journey once and then that information is sent to the person that's asking for that information, so the client.
Oliver Telfor: Perfect. I mean, if it's a case of me sitting through and going, "you spent this much on Vinted, you spent this much on ASOS, you spent this much on Amazon," or I can just send a link to my bank and you can do it yourself. I know which I'd rather do from a customer's perspective. So that makes sense from my point of view. From a SmartSearch perspective, we are a tech company that's Digital First, and we believe that Digital First is the best way to do it. How do we then get clients to sort of understand that and then reap the benefits of that Digital First approach?
Sophia Solomon: So what we're seeing is actually a change in the market in that we're now seeing our clients asking for that Digital First journey, fully understanding the benefits of having standardized processes, that one-stop-shop for all of their compliance needs, making it very easy from when they're being audited as well. You know, when you've got manual processes and inconsistent ways of working, you are opening yourself up to risks of not following your legal obligations and therefore the risk of fraud increases. This way, through automated and reliable sources, it means some of the challenges that you have from a manual perspective, like fraudulent statements coming through—we know how easy it is in this day and age with the use of AI to be able to knock up a fraudulent bank statement and pass that through. Indeed, we've seen examples of that. It's very difficult to see that with the naked eye, however, you can intercept that by introducing open banking integrations. So that's validated data and we've got direct access to that.
Oliver Telfor: Yeah. I mean, one of the things we talked about with Joe Morris in a different episode is that power of transparency and making sure that, you know, there's nothing to hide. You can see where the money's coming from. You can see who you are dealing with and who your customers are. This for us feels like just another extension of that point. Is that power of transparency key here?
Sophia Solomon: It's the power of transparency, but also it's the power of transparency for our clients' clients. So they can see exactly what's being shown. They've got the power to say, "Yes, I want to share it," or "No, I don't." So it works on both ends from that perspective.
Oliver Telfor: Perfect. I mean, giving more control and transparency, and especially giving control about what data you are comfortable sharing, is also key. So that was a really good overview of Source of Funds, and I feel it's a really good overview of our solution and what we're going to be offering. We will have our partners on later episodes and sort of talk that through in more depth of what that looks like. But for the time being, that was great. And if you want to know more about our solutions and other things that we can offer, head to smartsearch.com. You can see all the industries we work in, our current partners, and maybe find a solution that's right for you. So thanks for listening, and thanks for taking the time, Sophia, and join us next time.