The Limitations of Technology in Anti-Money Laundering

The Limitations of Technology in Anti-Money Laundering

The UK property market is vulnerable to money laundering due to the large amounts of money involved in property transactions, making it an attractive target for criminals. Estate agents recognise and embrace the potential of technology as a part of the solution to this problem; however, when it comes to combating money laundering in the property industry, relying solely on technology is not enough.

Understanding Tech’s Role and Limitations
Using technology in AML processes can enhance efficiency and accuracy in identifying and verifying clients’ identities, address verification, PEPs, and Sanctions checks. Smart Compliance uses this tech as the first line of defence against money laundering, saving time and resources for both estate agents and their clients.
However, due to the complex nature of regulatory requirements, technology alone is insufficient, requiring a more comprehensive and human approach. Property transactions can become complicated, for example, when involving offshore companies or multiple intermediaries, which require a broader strategy for AML. This is why an end-to-end service or fully managed AML solution isn’t just nice to have; it’s a necessity, whether implemented in-house or outsourced.

The Importance of Enhanced Due Diligence (EDD)

One of the critical areas where technology falls short is in executing enhanced due diligence (EDD) measures. It involves gathering additional information beyond standard customer due diligence to verify the identity of individuals or entities and assess the nature of their transactions. For instance, obtaining documents such as marriage certificates, verifying probate documents or looking into company sales or purchases. While technology can automate many aspects of due diligence, certain tasks remain challenging to accomplish without human intervention and physical gathering of documentation.

Why Full-Service Matters
Based on our experience, more than half of the seller cases we handle on a daily basis need Enhanced Due Diligence (EDD), an area where only human expertise will do. When a case escalates to EDD, our specialists step in, liaising directly with agents’ clients to collect the information required, enhancing the customer journey, and ensuring compliance. From implementing our system in your agency, assisting with policies and risk assessments, to guiding you through audits, it’s all part of the service we offer.

A Word from Our Commercial Director – Amy Shields
Amy Shields, Commercial Director at Smart Compliance, highlights the risk of relying solely on technology, ‘At Smart Compliance, we understand the appeal of technology in tackling AML, but relying on tech checks isn’t enough for full AML compliance. With over 55% of our sellers’ cases requiring enhanced due diligence, it’s clear that an end-to-end solution is required, whether through an in-house process or by outsourcing. I speak with agents daily who are concerned about a HMRC audit and unsure if they are in compliance with HMRC’s AML guidelines. – I love being able to support these agents and work with them as a partner in their business.’

Technology has transformed AML efforts, making processes faster and more efficient. But the thoroughness required, especially for EDD, demands a mix of technology and knowledge. It cannot replace the human element in conducting due diligence, such as verifying identity documents and assessing transactional risks. That’s exactly what Smart Compliance provides. We ensure your agency not only meets AML requirements but does so with confidence and ease.