Putting the cart before the horse

17 Jan 2020

The introduction of the fifth Anti-Money Laundering Directive earlier this month has already caused some consternation among industry stakeholders.

This is mainly down to identification checks that need to be carried out by those dealing with clients, and the wording within the directive which says advisers/agents and the like need to carry out electronic verification of these documents, rather than just rely on seeing paper copies of passports and driving licences, as was previously allowed.

The threat of fines and/or criminal prosecution for non-compliance hangs over this and there is the added complication that compliance with the directive is linked to new guidance on what should be done, which has yet to be published.

It seems a little like putting the cart before the horse, and it is clearly not ideal, especially if you have not used electronic verification before and you are slightly confused by the array of services available to do this.

Some firms to do nothing – after all, there are some suggestions that electronic checking is a ‘nice to have’ rather than a statutory requirement – but I would urge against this because, from Paradigm’s perspective, it would be far better to comply now rather than chance sanction further down the line.

Plus, of course, we’re all acutely aware of the considerable damage fraudulent activity in the mortgage market can do. Despite a considerable amount of work in this area, there are still cases which are criminally successful and, where there is culpability, action can of course be taken.

This is not forgetting, of course, the stress and financial issues that those caught up by such fraud are likely to endure. One case of fraud – particularly when it’s as a consequence of fake ID being used and passed – is clearly one too many.

It’s why we’ve linked with Experian to offer a range of tools and checks specifically designed to comply with these requirements, and we would hope our firms will see the benefit in utilising them now, especially when the cost has been discounted considerably.

We have to face up to facts here – criminals will continue to target the mortgage market because of the vast sums of money involved. But with a degree of vigilance, common sense and by using technology, we can certainly stop the unsophisticated attempts, and do all we can to ensure both the industry, ourselves and our clients are not on the wrong end of this type of crime.

Bob Hunt

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