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Majority of firms believe hard documents are only way to verify customer identity

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  • 31/08/2022
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Around two thirds of firms, 59 per cent, believe hard copy documents provide reassurance that a customer is genuine, despite awareness of electronic verification.

According to SmartSearch, which surveyed around 500 regulated firms across legal, property, banking and finance, found that around half, 49 per cent, used documents like passports, IDs and utility bills to verify new business customers.

However, 83 per cent said they were aware of digital systems for electronic verification.

The research found that around 40 per cent of firms in the North East and East of England used manual verification alone.

It also noted that 40 per cent firms in the South East thought manual verification was the only way to guarantee a person’s identity.

“With the number of fakes and forged documents rising – no doubt helped by criminals looking to circumvent growing sanctions – the latest data should sound alarm bells to businesses who wrongly believe hard copies are secure,” said Martin Cheek, managing director of SmartSearch.

“This reliance on flawed manual checks is even more worrying as our data reveals many businesses aren’t confident enough to spot a fake. If there’s ever been a case for switching to a digital system and adopting electronic verification, now is certainly the time.”

“Going digital and improving compliance must move higher up the agenda for businesses, especially in the current climate,” Martin added. “Even if it’s not for sake of efficiency but as regulators continue their crackdown and the number of hefty fines increase.”

Automated anti-money laundering systems allow for electronic verification, meaning users can complete checks in seconds.

The firm said the checks can be done as part of onboarding or retro-screening existing customers, so they can meet Know Your Customer requirements.

SmartSearch added that it could offer automatic monitoring and high-risk country reporting.

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