Tech mistrust exposing third of regulated firms to money laundering

SmartSearch’s Fraser Mitchell says more than a third of people ‘can’t trust’ electronic ID verification and rely on manual checks instead.

Fraser Mitchell, SmartSearch

A lack of trust in electronic ID verification is leaving more than a third of regulated firms exposed to the dangers of money laundering and other financial crimes, SmartSearch warns.

Some 36% of those questioned in its annual survey of 500 compliance stakeholders – including property, financial, legal services and accountancy – said they couldn’t trust the technology and instead relied on manual checks.


Fraser Mitchell (main picture), Technical Director of SmartSearch, says: “This indicates a significant dip in trust for electronic ID verification technology. And yet it is recommended as part of the due diligence process in the Money Laundering and Terrorist Finance Act 2020.

“We believe many regulated firms may be unaware of this advice, hence the mistrust. In the meantime, criminal gangs are washing billions through the UK’s financial systems. It’s a real concern.”

In regulated firms nearly nine out of 10 (87%) of those who use manual methods of ID verification were naively confident that they could identify a fake document such as a passport, driving licence or utility bill.

An astonishing 94% of compliance stakeholders in property companies believed that they could spot fake documents compared to a more modest four out of five (81%) in accountancy.


The financial sector was similarly high, with nearly everyone (95%) believing they could manually spot a fake ID, despite forgery risks. At 68%, the legal sector was the least confident.

Nicola Gifford, SmartSearch
Nicola Gifford, SmartSearch

Nicola Gifford, General Counsel at SmartSearch, adds: “Due diligence processes are critical to helping regulated firms mitigate risk – both financial and reputational. So it is important that we help engender trust in electronic ID verification within these businesses.

“This is our third ‘Electronic Verification (EV) Uncovered’ campaign.

“Our objective is to address common misconceptions among regulated firms, with a view to lowering the barrier to businesses adopting EV as standard practice.”

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