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In the UK, it’s compulsory to comply with anti-money laundering regulations. SmartSearch can help you carry out fast and accurate anti-money laundering checks no matter what industry you lie in, whether it's in the finance, property, insurance or legal sector.
Money laundering is when criminals integrate their illegally-obtained cash into the financial system, so it looks like it was earned legitimately. ‘Anti-money laundering’ refers to the laws, regulations, and procedures designed to prevent money laundering, helping to stop the staggering £100 billion* of illicit wealth that impacts the UK economy annually.
Regulated firms, such as finance, property, law and insurance, are legally obliged to comply with these AML regulations, as well as art markets and other high-value dealers. The compliance of these sectors contributes to the wider battle against financial crime and protects firms within them from the risk of money laundering too.
What is a Smartsearch?
There are several different key components when it comes to AML checks, but a smartsearch incorporates KYC (Know Your Customer), PEP (Politically Exposed Persons) and sanctions screening, along with ongoing monitoring and enhanced due diligence. While a fragmented approach to these checks is time-consuming and inefficient, a smartsearch is one simple, holistic compliance solution, which is why we are trusted by over 7,000 clients.
*Electronic Verification Uncovered II*
It is important that, before you onboard any given customer, you vet them by performing a series of anti-money laundering checks. These include verifying the customer’s identity, as you can do with our multifaceted TripleCheck authentication system, which offers all of the following AML checks:
Using triple-bureau Credit Reference Agency (CRA) as well as more than 1,100 databases from the Dow Jones Watchlist, TripleCheck can quickly and efficiently check the customer’s details against lists of sanctioned individuals and PEPs.
All in all, SmartSearch is the go-to AML compliance platform built to easily verify clients based not only in the UK but on a global scale. Our platform has the following features that make anti-money laundering checks far easier:
Contact us to request a free personalised demo of the SmartSearch AML and compliance platform.
Anti-money laundering checks — or ‘AML checks’, as they are often casually called — are, to a large extent, self-explanatory. They are indeed aimed at preventing money laundering. A business will often use AML checks to identify and verify prospective customers as well as assess what money laundering risk they would, if onboarded, present to the company.
For the purpose of judging a customer’s money laundering risk and complying with AML regulations, businesses could check information about the following subjects:
SmartSearch offers an extensive AML compliance platform that would provide you with the functionality you need for completing AML screenings of all types. The AML checks you can make with SmartSearch technology include:
- KYC checks
- Screening against sanctions lists
- Checks for Politically Exposed Persons (PEPs)
- Checks for Relatives and Close Associates (RCAs)
- Checks for Special Interest Persons (SIPs)
- Checks for Persons with Significant Control (PSCs)
- Ongoing monitoring
When should AML checks be carried out?
This will very much depend on the type of AML check. For example, you should perform KYC and initial checks before agreeing to any business dealings between your company and the client. However, you can also regularly AML-check a client after your firm has on-boarded them.
The global money-laundering watchdog Financial Action Task Force (FATF) recommends that, as a minimum regulatory requirement, financial institutions undertake AML checks when:
It’s important to remember that any business that could be vulnerable to money laundering needs to comply with AML regulations, with regulated sectors including legal, accountancy, investment, insurance, property and finance. Failure to comply with AML laws and regulations can have severe consequences, so you must carry out due diligence.
This is where we come in. SmartSearch offers an all-encompassing solution for your firm’s AML and compliance requirements. The user-friendly system enables staff at any level to successfully run AML checks, and we are constantly updating and improving the platform to ensure it remains the leading AML solution on the market.
Our unique verification platform offers a KYC solution that also provides full Sanction and PEP screening and ongoing monitoring.
Contact us now to book a free demo.
What would constitute warning signs that money laundering may be occurring? You should be particularly concerned if you notice any of the following when undertaking AML checks:
Other common AML red flags include a customer’s PEP status or sanctions exposure — either of which SmartSearch’s automated AML system can detect and flag up.
We can create a tailor-made package to fit your needs and budget without compromising on functionality and service to ensure our unique AML solution is affordable to all businesses.
Let one of our highly-trained sales team demonstrate the multi-award winning SmartSearch AML product
The KYC process is changing. Businesses have used manual processes for customer verification by arranging to collect physical, tangible documents and inspecting them closely, but this process is often not meticulous enough. This situation starts to argue the case for electronic verification (EV).
Switching to online methods of searching PEP lists and sanctions lists can assist you in streamlining the process and making it more reliable. Our own TripleCheck solution can, through the following means, help your organisation to keep AML regulatory risks at bay.
A single round of manual checks can take at least a day to complete. However, in one survey of 500 AML-regulated firms, we found that, for 82% of the companies, a series of manual KYC checks would swallow up two or more days — and more than a week for 22% of the survey respondents.
Conversely, verifying customers electronically garners quicker and more accurate results. For each customer, the initial Know Your Customer (KYC) checks can be completed in just two seconds, and can use regularly updated international databases — like those accessible to SmartSearch clients.
Our TripleCheck service can thoroughly establish a document’s authenticity through utilising: sophisticated biometric facial recognition techniques, a customer Selfie Liveness Video (SLV) and anti-fraud technology.
With the manual approach to AML compliance, the business would typically undertake KYC checks for the client onboarding process and then at very particular times thereafter — such as every year, two years, or five years. However, pKYC differs in checking onboarded clients continually.
To fulfil this responsibility, a SmartSearch-provided pKYC programme would, for your company, scan a wide range of data sources and, in response to any relevant changes to the data held by these sources, update the client profiles your company has on file. This pKYC system would even allow you to incorporate your company’s own existing client data and can pay dividends in the fight against money laundering if, for example, a new customer provides you with ID details that are actually already linked to a client registered on your company’s database.
Naturally, if you are running a particularly ambitious business, you could be keen for it to reach out to potential customers or clients based abroad. However, moving into international markets would also require you to meet international standards when it comes to AML efforts. This, in itself, can throw up new problems. As AML regulations differ between countries.
To assist in identifying, verifying, screening, and monitoring customers, and by leveraging cutting-edge technology, data analysis and global data partnerships, SmartSearch’s International Individual Check enables you to onboard and transact with clients from over 40 countries worldwide.
Having all this AML functionality at your fingertips does not have to prove a large financial burden for your business. Save on overheads with SmartSearch’s AML software, which can be tailored to meet your business’s unique needs and requirements.
We can assist you in tailoring your SmartSearch package to suit the number of AML searches you require. If you find that your organisation agrees to a particular package but later needs it adjusted, a dedicated customer services manager from SmartSearch can help you. We have designed the pricing structure for SmartSearch in such a way that our AML offering will remain affordable to all companies, regardless of their size.
Through carrying out a round of initial KYC checks on a prospective client, you can learn a lot about what kind of money laundering risk they would pose to your business. However, once you have completed these checks and onboarded the client, further checks will be needed. This is because you can’t be certain that this risk won’t change during the course of the client’s professional relationship with your business.
When you adopt the SmartSearch digital compliance AML system, you can not only use it for undertaking initial KYC checks but also arrange for it to automatically screen all your clients every night. If any of these screenings detect that any particular one of these clients has received a financial sanction or become a PEP, your firm will be alerted.
Anti-Money Laundering (AML) laws are implemented to require businesses and financial institutions to follow a number of AML processes. AML regulations tackle not only money laundering but also: tax evasion, drug trafficking, political corruption and the sale of illegal goods. These laws include:
This specifies a range of AML requirements for businesses to satisfy.
This is the main AML regulatory law for all the UK’s financial services, it includes guidelines for how the FCA (Financial Conduct Authority) should fulfil its duties.
Through reading the terms of this Act, you can learn about not only criminal offences as they are defined in the UK but also how each of them are penalised.
In addition to these laws, which should be meticulously followed, the recently amended Money Laundering Regulations of 2020 should also be carefully considered.
Industries such as financial institutions, the hospitality sector and retail services are most at risk for money laundering and terrorist financing, so should take extra care when going through their AML checks, but it should go without saying that every organisation has a legal responsibility to adhere to the law in a number of different ways.
This term is used for a series of AML checks aimed at not only establishing that the customer is who they say they are but also gathering information needed for you to assess the money laundering risk the customer may pose to your business.
MLR 2017’s regulation 18 requires you to complete an assessment of the money laundering risk to your company — and a key aspect of that assessment will be considering whether and how often your company serves PEPs (Politically Exposed Persons).
Once a customer has signed a contract with your business, you are legally required to monitor this customer on an ongoing basis for as long as the contract lasts. This monitoring will need to include transaction monitoring.
How well do you know each of your customers? Of course, this is a vague question — but, for the purposes of AML compliance, you need to know who your customers are. Once you’ve asked them for identification and proof of address, you also need to know what onboarding this specific customer would mean for the money laundering risk to your business.
The risk could be higher if a customer is currently sanctioned, a politically exposed person (PEP) or a relative or close associate of a PEP. You should therefore check whether the customer falls into any of these categories. To make this process a lot more time efficient, you could use SmartSearch to screen the customer against lists of PEPs, RCAs (Relatives and Close Associates), and sanctions.
The checks made against these lists — as well as the necessary verification checks — would count as KYC checks.
Are KYC and AML checks different?
The acronym ‘AML’ (Anti-Money Laundering) has a much broader definition than that of the acronym ‘KYC’ (Know Your Customer).
Whereas AML is a legislative and regulatory framework that businesses with a high money laundering risk need to follow in order to lower this risk, KYC is just one — though crucial — part of this framework, and specifically requires firms to familiarise themselves with their customers. KYC takes place during the customer onboarding process and allows the business to learn the personal details of the customer and the nature of the customer’s business
However, the KYC process does not just consist of preliminary checks. You should also continue KYC throughout the course of the commercial relationship so that you can keep track of the customer’s risk profile. Ultimately, KYC is a subset of AML, KYC checks can also be deemed AML checks. However, not all AML checks should be classed as KYC checks.
Another AML-related acronym you might have come across — and understandably been confused by — is ‘CDD’. This stands for Customer Due Diligence — which, like KYC, is crucial to AML compliance. The concept of Customer Due Diligence can initially be difficult to precisely grasp. The Law Society defines CDD as ‘a process of checks to help identify your client and make sure they are who they say they are’ — a description that may make CDD sound indistinguishable from KYC.
To a certain extent, CDD can be considered part of KYC. This is because the KYC process involves performing CDD in order to verify the customer’s identity, and so CDD can be seen as an integral aspect of KYC.
CDD is performed not just during KYC but also for the rest of the customer relationship’s duration. CDD is used for a wide range of purposes, including:
What KYC and CDD have in common is their importance to a reliable AML programme. While KYC can help you initially establish the risk presented by the customer, CDD would let you, before the contract ends, keep tabs on that customer so that you can reassess this risk as and when necessary.
Why is Customer Due Diligence important?
If you run a business that falls under the AML regulations, you would not legally be able to work with a prospective customer before identifying and verifying them. However, the worth of CDD would remain relevant for your business long after a customer has passed the initial CDD checks and been onboarded.
With our unique AML digital compliance platform at your disposal, you can follow a long-term plan of regularly checking many aspects of a customer’s behaviour as part of a CDD regime, including:
Some changes to the customer’s risk might require you to undertake Enhanced Due Diligence, while others — like the customer becoming sanctioned — could force you to terminate your contract with them.
Other changes include whether the transaction or business relationship will involve:
In the modern world, digital currencies like Bitcoin are becoming increasingly prevalent, with each new addition bringing a different standard of security, increasing AML risks. Essentially, a virtual currency is ‘a digital representation of value only available in electronic form’ and ‘stored and transacted through designated software, mobile, or computer applications.’ Virtual currencies:
Virtual currencies are easy to use while offering speedy transaction speeds. However, though cryptocurrency has hugely grown in popularity in recent years, international rules and regulations have been slow to adapt to the increased money laundering risk.
If you run a cryptocurrency firm or simply a business that facilitates transactions of virtual currencies, subscribing to the all-encompassing SmartSearch AML platform would help you to comply with AML regulatory changes — as the platform will be automatically updated to accommodate these.
In terms of the depth and functionality of the AML search it delivers, our AML platform is unique and unrivalled on the market.
It is essential that you use an AML solution capable of performing robust checks. SmartSearch’s own AML technology confidently ticks this particular box — as, by entering only the customer’s name, address, and date of birth into the system, you can conduct a range of exhaustive checks.
Completing a full AML check with SmartSearch takes just a matter of seconds. All of the following steps will be included as part of the check:
Individuals or businesses either participating in or suspected of illegal activities can be subjected to sanctions and, as a result, prevented from engaging in particular industries. Financial sanctions can include asset freezing, restrictions on financial markets and orders to entirely cease trading.
As you would be breaking the law if you worked with anyone covered by a sanctions list, which either a government body or financial authority could issue, you need an effective verification process in place. With SmartSearch, our platform allows you to quickly and easily complete sanctions searches on clients.
Changes in customer circumstances, money laundering risks, and the AML regulatory landscape mean that carrying out Customer Due Diligence only at the onboarding stage and periodically thereafter is no longer seen as sufficient. The ongoing monitoring functionality baked into SmartSearch’s AML compliance system completes new KYC checks every night, using the Dow Jones Watchlist’s in-depth data as a reference point.
The SmartSearch platform can monitor sanctions lists, PEP lists and Ultimate Beneficial Ownership (UBO) on an ongoing basis.
Many AML checks are aimed at reducing the chances of money laundering happening in the first place. However, with transaction screening, your business can detect if and when financial crime is happening, and so give you the opportunity to stop it in its tracks.
Through using AML software with transaction screening functionality built-in, you can see customer transactions either in real-time or retrospectively. Transaction screening can be used for analysing all elements of a customer transaction so that, if it is indeed a case of money laundering, the problem can be effectively addressed before it worsens.
The Law Society defines a Politically Exposed Person (PEP) as ‘someone who’s been appointed by a community institution, an international body or a state, including the UK, to a high-profile position within the last 12 months.’ PEPs can include members of parliament, ambassadors or high-ranking officers in the armed forces.
At SmartSearch, we present you with a smoother way of deciding whether a client is indeed a PEP — as our AML software can be used to check their details against PEP lists. Though simply working with a PEP is not illegal, doing so would still make your business more vulnerable to money laundering risks. This is because a PEP’s high profile and influence would render this particular individual likelier to engage in bribery or corruption compared to the average client.
It is important not to underestimate the extent to which fraud and financial crime can potentially undermine your commercial operations. In one survey, 56% of UK consumers said they would switch to a different bank if their current one was hit by a money laundering scandal. This percentage increased to 64% in 18-24-year-olds and 68% in 25-34-year-olds.
Even if you choose to simply see AML fines as a ‘cost of doing business’, you could risk losing customers — perhaps in large part due to negative word of mouth. What steps should you take to meet your AML responsibilities? Here’s a summary of the key ones:
We can provide tailor-made but comprehensive AML training for you and your workers, enabling everyone in the company to get to grips with our user-friendly AML software and use it to perform quick and easy anti-money laundering checks.
Our AML specialists have the expertise to help you in designing and implementing an AML strategy that will suit your specific corporate needs.
When you switch from manual to electronic means of making KYC checks, you can make them more quickly and reliably — especially when you use SmartSearch, with its access to immense amounts of external data.
Our ongoing monitoring service scans the Dow Jones Watchlist databases every night, allowing for customer information held by SmartSearch subscribers to be updated quickly.
The SmartSearch platform can carry out a wide range of anti-money laundering checks automatically. What’s more, you can have these checks happen continuously when you utilise Perpetual Know Your Customer (pKYC), an especially dynamic solution for risk management.
Have a specific question about SmartSearch’s AML and compliance solution, or would like to discuss a bespoke subscription? Speak to an AML expert today, or alternatively, phone us on 0113 537 4042 or send us an email via info@smartsearch.com.
Encouraged by both the FATF and the FCA, a risk-based approach requires that firms thoroughly assess the money laundering threat posed to their business, and deploy an appropriate amount of resources to counter it. This is a proactive approach which should enable companies to detect and diffuse any risk of money laundering before it can take place, whilst using resources efficiently.
If you encounter any suspicious behaviour, you should fill out a SAR (Suspicious Activity Report) with all the relevant details, before submitting it to the National Crime Agency (NCA), via the SAR online system. The UK Financial Intelligence Unit then receives and processes SARs on behalf of the NCA. SARs can also be submitted anonymously, but your identity will remain confidential regardless.
The first European legislation passed in an attempt to bolster anti-money laundering efforts was the first Money Laundering Directive, which came into force in April 1994. Since then, 4 further MLDs have been brought into effect, to provide guidelines for companies in the finance sector on how to reduce the risk of money laundering.
