What does the rise in hybrid working mean for AML compliance?

Covid-19 and the shift to home
working

As a result of the pandemic lockdowns, millions of workers had to work from home. There was a fear that productivity would fall, however, the lack of commute and flexibility of remote working has actually had the opposite effect with more than two thirds of businesses reporting an uplift in productivity as a result of home working*. In response, firms are increasingly encouraging home working for some or all of the week, which not only helps improve productivity and work life balance for staff, but also reduces real estate costs.

In fact, according to a new report from PricewaterhouseCoopers**, half of UK businesses expect to reduce the size of their office space as a result of the pandemic, with a third looking to cut it down by 30%. HSBC announced earlier this year that it will nearly halve its office space in the coming years while Deloitte UK has already closed four offices and put more than 500 staff on work at home only contracts.

While the cost of office space has been the main driver for a push to remote working, more recently there have been other factors in play - most notably, rising energy prices.

According to recent research from Smart Energy GB***, 62 percent of small businesses are worried about rising energy costs and whether it will affect their ability to operate over winter, while almost a third are considering forcing their staff to work from home over winter to try and mitigate the financial impact.

Workers want a hybrid set up

But it is not just businesses themselves that are pushing for ‘working from home’ to become a permanent feature - research shows that ‘hybrid’ working - where the working week is split between the office and home - is most people’s ideal set up. Almost half (44%) said they’d prefer to work from home at least some of the time, compared to 36% who said they’d prefer to be 100% office based and 15% who want to work from home all the time. And allowing staff to work from home could even become a legal requirement - under post-pandemic plans being considered by the government, flexible working could soon be made a default right.****

So, it sounds like 100% office-based working might be a thing of the past, but for regulated businesses, switching to a hybrid working set up is not quite as straightforward, as many of their anti-money laundering (AML) compliance practices rely on office-based procedures that cannot easily be fulfilled remotely.

Reliance on manual processes

Remote working or not, regulated firms are still required to run AML checks on customers before they do any business with them. Most regulated firms, like estate agents, financial institutions and legal firms still rely on manual processes i.e. getting clients to bring in their passports/photo IDs and making copies of those in the office, and they often have manual record keeping systems too. Others do have a more digital set up, but often using internal CRMs that cannot be accessed securely from outside the office.

For these companies, it is difficult, if not impossible, for staff working from home to run the proper checks needed to onboard a new customer. The result is that either the staff member and the customer need to come into the office to complete the checks - not a realistic option given that people are so used to being able to do everything remotely, not forgetting that the client may not actually be able to travel if they are isolating - or worse, the checks simply won’t be done properly - or at all - putting the business at risk of fraud and of being fined for not meeting their compliance obligations.

Electronic Verification

For many years now, electronic verification (EV) has been seen as the most reliable and robust way of completing AML checks, with regulators across the world pushing firms to use it as a preferred solution.

And now, as a result of the pandemic, not only is EV the most reliable option,
but it is also the only viable one. Unlike manual checks, which are time consuming and open to error, electronic verification is quick, secure and reliable, offering a consistent approach to AML procedures.

By using cloud-based technology, electronic AML platforms offer a quick, easy and secure way for regulated businesses to not only run full AML checks from the office, remotely or a mix of the two, but also, to ensure all record keeping is up to date and fully compliant.

Using data from global reference agencies and watchlists, electronic systems can check, firstly, if the ID document provided by the individual is genuine, secondly, that the individual and the ID match, and thirdly, the risk, if any, on entering into a business relationship with that individual.

SmartSearch - a hybrid solution for a hybrid world

SmartSearch is an online AML customer due diligence platform, which can be used independently, or integrated with a firm’s existing CRM to run full AML checks, with sanctions and screening.

Unlike many AML providers, SmartSearch is able to offer all aspects of compliance in one system - the initial checks, screening, enhanced due diligence, record keeping and monitoring. This means that if, following the initial verification and screening process, SmartSearch identifies a risk - for example, the person is a SIP (Special Interest Person with links to financial crimes), PEP (Politically Exposed Person seen as more vulnerable to bribery) or RCA (Relatives and Close Associates of PEPs), it then automatically performs enhanced due diligence checks to further investigate the potential risk, this allows the business to decide whether or not to enter into a relationship with that customer.

All searches are automatically saved on the system for easy record keeping while SmartSearch’s ongoing monitoring service ensures ongoing compliance. SmartSearch also has access to the latest in anti-fraud, facial recognition and selfie likeness technology, offering an extra layer of certainty to all checks. Customers can upload scans/images of their photo ID for checks, while images and selfie videos can then confirm that the person matches the ID - all of which can be done remotely.

The platform is cloud-based, which means it can be securely accessed from anywhere, making it easy for staff to access from home, while the fully integrated app means that the same functionality is available via phone or tablet, with all data feeding into the one central database.

This means that any search completed by staff members will be uploaded and hosted on the platform and monitored every night for changes. The results are received in a matter of seconds, meaning no matter what time they are working, whether they are in the office, working from home, or out with a client, all staff can onboard new customers quickly, easily and securely.