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As Passport Fraud Rises, Are Hard-Copy Documents To Be Trusted in the KYC Process?

Is a hardcopy document to be trusted above a digital copy? According to two-thirds of regulated firms, hard copy documents provide reassurance that a customer is genuine, the latest anti-money laundering (AML) data has revealed.

The question of validity was brought to light in the recent survey of the AML software specialist SmartSearch, which grasped the opinion of 500 regulated businesses across the UK.

The survey covers businesses across legal, property, banking and finance sectors and forms part of SmartSearch’s Electronic Verification Uncovered campaign.

The survey found that despite the majority of firms being aware of digital electronic verification (EV) systems, half still turn to hard documents like passports, IDs and utility bills to verify new business customers.

Geographically, the data also highlights the North East and the East of England as hotspots with more than two in five firms relying on manual verification alone.

Meanwhile, the same number of regulated firms in the South East believe manual verification is the only way to truly guarantee identity.

The shocking findings come as passports continue to be the most attacked form of identification. 2020 saw a 41 per cent increase in ID fraud, generating losses of $712billion and fresh opportunities for money laundering and serious organised crime.

Martin Cheek, managing director of SmartSearch
Martin Cheek, managing director, SmartSearch

“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,” comments 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.”

So how can the power of fintech be applied in this instance, to streamline know your customer (KYC) processes while also ensuring a practical, reassuring level of cybersecurity measures?

As part of its survey, the company has put forward the use of automated AML systems as a means to satisfy this area of EV.

‘Automated AML systems offer the certainty of EV, allowing users to complete thorough checks in just a matter of seconds,’ the company’s official statement read.

It continues: ‘These can be completed as part of onboarding or while retro-screening existing customers, meeting the necessary KYC requirements’.

As global sanctions increase, automated AML systems are capable of automatic monitoring and high-risk country reporting, allowing users to identify both new and existing clients who are subject to sanctions or even regarded as a politically exposed person (PEP).

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


  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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