If you thought Brexit uncertainty was bad for the market, wait for the hit from the pandemic. What we’ve seen so far is the tip of the Covid-19 iceberg.
The evidence from previous downturns suggests a likely rise in fraud and financial crime, partly because businesses battling to stay afloat will seize any new opportunities and sometimes overlook vital checks.
We also know that the property market presents a tempting target for fraudsters and money launderers, providing them with the opportunity to ‘wash’ large amounts of cash in a single transaction.
Too many firms do not have adequate Know Your Customer processes, even at the best of times. Fewer still have systems that are robust in the face of social distancing.
With clients unable to present original photo ID in person, businesses are turning to alternative methods of facial recognition – typically, comparing scanned ID documents with ‘selfies’ or mobile videos.
We have incorporated this into SmartSearch’s digital KYC and anti-money-laundering solution and are rolling it out to customers. We’ve always been very clear, though, that facial recognition is not enough. It doesn’t provide the security businesses need that a prospective new customer is who they say they are.
Fraudsters are adept at producing fake documentation. If you can’t use original documents, how much easier is it for criminals to target you? Like coronavirus itself this may seem a low-probability risk, but businesses must be aware of its potentially devastating impact.
A belt-and-braces approach is needed, with facial recognition where desired but backed up by electronic verification using credit-reporting data that cross-checks against multiple sources going back years.
When the government introduced new money-laundering regulations in January, I made no secret of my belief it had missed a trick by failing to make EV compulsory. If Covid-19 brings a rise in fraud, the government may rectify that error when it enacts the sixth anti-money-laundering directive in December.
In the meantime, a lot of damage may have been done. Don’t let it happen to you.
John Dobson, chief executive, SmartSearch
