Just three in 10 estate agents use open banking to verify their clients’ funds – despite it being one of the most secure ways to provide secure third-party access to financial data through an API (application programming interface).

The Proceeds of Crime Act requires regulated 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.

VERIFY SOURCE

But new data released from SmartSearch also reveals that in total seven out of 10 (73%) of regulated firms are failing to adopt open banking – or even verify source of funds manually.

Nearly a quarter (24%) of respondents said they use a combination of manual review and open banking services.

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.

OPEN BANKING

Three quarters (75%) of compliance decision-makers in the legal sector said they do not verify sources of funds using open banking. And a quarter (26%) admitted to not checking the source of funds, even manually – which 28% of people said they did.

Collette Allen, SmartSearch

Fraser Mitchell (main picture), Technical Director of SmartSearch, says: “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.”

And Collette Allen, Chief Operating Officer at SmartSearch, adds: “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.”