Brexit saga: AML compliance implications
SmartSearch CEO John Dobson examines what Brexit means for anti-money laundering legislation and what accountants need to know to remain compliant
The full implications of Brexit are still uncertain for many industries. But the government has been clear that anti-money laundering (AML) rules will not be relaxed. Accountants need to be aware of these new rules as HMRC and the FCA have recently shown they are willing to fine those not taking AML seriously.
In January EU-wide money laundering directives were published and still need to be adhered to in the UK. In addition, as part of the legislation governing the departure from the trading bloc, the UK government has stipulated that electronic verification should be used, enabling businesses to move away from manual, document-based checks when onboarding clients.
How to ensure you are compliant?
Switching to electronic verification is the best way for accountants to ensure compliance with all the latest legislation, in the UK and EU. We’ve now had six EU Money Laundering Directives with the latest published a few weeks ago. As many accountants will still want to do business with clients in the EU, they will need to be compliant.
For any accountant, the best way to be compliant is by switching to electronic verification when onboarding new customers, and we would urge all businesses to make that switch this year. The Brexit legislation has been amended recently to clarify the provision confirming that identity can be verified electronically, which is now UK law.
Who’s behind the mask?
For some time now it’s been clear that documents are dead and that there is an alternative in electronic verification, which is quicker, accurate, more reliable and cost-effective. It’s also less intrusive for you and your client, as well as being 100% Covid-secure because you don’t need to meet face-to-face. Faced with this third wave of coronavirus, accountants need to act fast to make the switch.
Few, if any, people would be able to spot a fake passport or driving licence if it passed their desk as forgeries are now so convincing that an expert can be deceived. Even once lockdown ends the requirement for face coverings to be worn at places of business clearly presents practical difficulties for identifications.
Accountants that have not switched to electronic verification could find themselves seriously exposed at best, or in breach of anti-money laundering regulations at worst. Therefore, switching to an electronic system which makes the customer onboarding process incredibly fast should be a priority. These electronic checks will include all the necessary Know Your Customer (KYC) and Anti-Money-Laundering (AML) checks and can be conducted completely remote and securely.
The latest technology can combine credit reference data, biometric facial recognition, and digital fraud checks. Software with CRA (credit reference agencies) data, electoral roll data and other reliable public data sources can reliably establish identity. By triple checking these different sources of information a unique ‘composite digital identity’ is produced that is virtually impossible to fake. All this can be done online, with no need for in-person meetings, face coverings or hard copies of documents.
This automated approach is quicker, convenient and more accurate. With HMRC recently sending a reminder to regulated businesses about their responsibility, with a record fine of £24m to a money-transfer service, now is the time that accountants should be adopting a quick and secure approach to AML and KYC checks.
Accountants can be up and running with a full one-stop-shop electronic AML platform that partners with the world’s best data suppliers in 24 hours. This will deliver completely reliable ID verification, automatic global sanctions and PEP screening with ongoing monitoring in a matter of seconds, ensuring your firm always remains AML compliant.