We know there is an endemic problem surrounding money laundering.
The release of the Panama Papers in 2016 exposed the scale through which individuals benefited from the offshore world, but the sheer number of scandals in 2018 – Rabo Bank, UBS and ING to name just a few – revealed a much more worrying trend; the extent to which some of the biggest financial institutions in the world have acted as key enablers to the flow of dirty money.
In response, rules and regulations around compliance are continuing to tighten, while regulators are also starting to prescribe the ways in which compliance should be undertaken.
For example, the fifth revision of the Money-Laundering Directive will come into force next year, and one notable update was that customer due diligence measures should identify the customer based on information from a ‘reliable and independent source’, ‘including, where available, electronic identification means’.
As a result, technology is beginning to transform the way we comply with regulation, particular AML regulations. So it is perhaps no surprise that the regtech industry is one of the fastest-growing industries in the world. And its hub is the UK, which is home to almost a third of the World’s top regtech companies.
Unlike manual checks, electronic systems offer a consistent approach, reliable outcomes and convenience, which has been taken to the next level, thanks to the latest generation of AML technology which is now available on a mobile phone giving users the ability to comply with AML regulation remotely.
And while soon, there will be no need to use physical documents for proof of identity, for those companies who still do, or are transitioning, technology can assist by validating passports, driving licences and proof of address and detecting fakes and forgeries.
Any businesses subject to AML processes that are still using documents should try the electronic alternative. Not only will save a small fortune, but it’s much more convenient.
Following Brexit, it could be that the FCA - or whatever agency takes over the control of our money laundering regulations – will put a bigger onus on organisations to get their AML systems up to date. This could mean that they take the 5th money laundering directive even further, and insist that electronic checks become mandatory,
But, while we don’t know whether electronic identification will become compulsory or not, what we do know is that electronic checks are the most reliable, secure and efficient source of information for identification checks. Manual checks are open to errors, but electronic checks offer a failsafe system that guarantees to recognise fraudulent documents and AML activity.