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12 October 2023

More than a third of firms in emerging finance sectors admit that they have been a victim of financial crime – including money laundering, in the last six months, new data from a cross-sector survey can reveal.

It should come as no surprise though as the same survey found that less than a quarter of firms complete the necessary checks, required by regulators to verify the identity of new individual customers.

The shocking statistics are revealed in a comprehensive new survey of 500 compliance decision-makers in banks, challenger banks, crypto platforms, property developers and gaming outlets by SmartSearch, the leading UK provider of digital compliance solutions.

It follows the Economic Crime Survey earlier this year, which found that the average annual cost for businesses for all fraud incidents has escalated to more than £16,000. Meanwhile, 11 percent of businesses reported annual total costs of over £20,000, while three percent reported costs in excess of £100,000.

The SmartSearch data found that banks were the biggest victims, with more than 40 percent of all banks surveyed falling foul of financial crime and/or money laundering. Within banking, the number of challenger banks (46%) slightly edged out traditional high-street banks (40%) in making the admission.

Across the other sectors surveyed, more than a third of property developers, a third of gaming firms and more than a quarter of crypto platforms all revealed they have a been a victim of financial crime in the last six months.

Speaking on the findings, Martin Cheek, managing director of SmartSearch said: “There’s no question financial crime can have massive implications for businesses. It’s not just the loss of revenue, it’s also the reputational damage and the questions it raises for regulators and authorities about the safeguards and compliance measures in place. That’s especially true if businesses are not properly verifying customers – as our survey has revealed.

“As the threat of money laundering and financial crime increases, and the burden of compliance grows even heavier, firms must take action and improve both their systems and their processes to avoid becoming victims too. Advancements in digital compliance are helping firms of all sizes mitigate these challenges by not only identifying potential red flags as part of detailed checks, but providing constant access to real-time data and intelligence.”

The survey is the third in SmartSearch’s continuing Electronic Verification Uncovered campaign, which aims to make firms aware of the dangers of relying on flawed, old-fashioned methods of identity verification. The campaign argues that businesses should use digital compliance to ensure they properly identify and screen clients - as recommended by the Government in the 2020 Money Laundering and Terrorist Finance Act - to stem the flow of dirty money into the UK and protect firms from the fines and reputational damage which come with breaches.

SmartSearch supports more than 6,500 clients and 60,000 users with their anti-money laundering (AML) compliance, including detailed Know Your Customer (KYC) checks, robust sanction and PEP screening, and real-time monitoring. It is trusted by more than 2,000 financial services firms, over 1,000 property firms, as well as one in two of the top 100 accountancy firms and one in three of the top 200 legal firms.

The research was conducted by Censuswide with 500 compliance decision-makers, aged 18+, who are in crypto (exchanges, OTC traders), gaming (casinos, online betting platforms, high-street betting shops), property development and banks (including challenger banks) between May 26 and July 2, 2023. Censuswide abides by and employs members of the Market Research Society, which is based on the ESOMAR principles, and are members of The British Polling Council.