A SmartSearch survey has found that 73% of regulated firms handling new individual and business clients have not started using open banking for verifying their clients’ sources of funds. Additionally, 21% of these firms do not perform fund source verification at all.

Fraser Mitchell, technical director at SmartSearch, said: “It’s surprising that regulated firms aren’t faster to adopt open banking, which would really speed up their compliance processes and help secure their business. Digital compliance platforms such as SmartSearch integrate source of funds checks, enabling firms to identify the origin of funds in just 60 seconds and with minimal input from the client.”

The survey, which involved 501 compliance decision-makers across sectors like accountancy, property, finance, and legal services, revealed that while 24% of respondents use a mix of manual review and open banking, 28% solely rely on manual review.

In the property industry, 72% of respondents don’t use open banking for automatic verification, while one in five (20%) fail to verify the source of funds at all.

Almost three quarters (70%) of accountants said they don’t use open banking for source of funds verification. 19% don’t verify the source of funds at all.

Figures for 200 compliance decision-makers in financial services are no better, with 74% of people not using open banking services to verify the source of funds when onboarding new individual clients and businesses. Only four out of five (80%) verify the source of funds, with 30% manually reviewing bank statements.

Sector-specific findings show that 70% of accountants and 72% of property industry professionals do not use open banking for fund source verification. In financial services, 74% of compliance decision-makers do not use open banking, with only 80% verifying fund sources, often manually. In the legal sector, 75% do not use open banking, and 26% do not perform fund source checks, even manually.

Collette Allen, chief operating officer at SmartSearch, expressed concern about this trend: “It’s concerning that so many firms aren’t checking bank accounts even manually. This is a high-risk approach, which could potentially put some of them in contravention of UK anti-money laundering laws.”

The Intermediary – https://theintermediary.co.uk/2024/01/majority-of-regulated-firms-yet-to-adopt-open-banking-for-fund-source-verification/

Read more from SmartSearch here: https://www.bclear.co.uk/agents-told-to-reconsider-how-they-operate-or-risk-reputational-damage-smartsearch/