New solution launches to help firms weed out dirty money
A new ‘source of funds’ solution has been launched to help regulated firms identify dirty money in just one minute.
Digital compliance provider SmartSearch has unveiled the new technology, which uses open banking to run checks for source of funds, proof of funds, source of wealth and source of income, either as part of a wider search or as a standalone check.
The check is completed in just 60 seconds, while the ability to review bank transactions remains live for 90 days.
Regulated firms – including peer-to-peer lending platforms – are advised to verify the source of funds when carrying out financial transactions. However, money-laundering criminals often exploit this process to hid e dirty money, SmartSearch said.
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The proceeds of Crime Act requires firms to submit a Suspicious Activity Report (SAR) to the National Crime Agency (NCA) if they believe that someone is trying to clean dirty money earned from the proceeds of crime.
The number of SARs submitted has doubled in the last five years and the NCA has estimated that it will hit a million for the first time this year, according to data cited by SmartSearch.
Read more: Regulated firms see rise in suspected money laundering
“Source of funds checks are a problem area for regulated firms because the legal framework around them is still poorly understood,” said SmartSearch managing director Martin Cheek.
“For example, it is often incorrectly assumed that funds transferred from a bank should be classed by default as clean money. That is not the case.
“Some also wrongly believe that they do not need to check a customer’s source of funds after their identity has been verified when, in fact, they do.
“These extra checks add to the increasing weight of compliance that many regulated firms are buckling under.”
Read more: How does the P2P sector protect its customers from fraud?
