REGULATED firms risk becoming enablers for sanction evasion by trusting long-term client relationships over critical compliance checks, according to a new survey.
The poll* shows 41pc of firms were confident that none of their clients are listed on sanctions or PEPs lists because they have worked with them for a long time.
Meanwhile, more than a third of firms (35%) said it was because they trust their clients. That is almost three times as many as in the previous year’s survey (12%).
The findings are from a survey of 500 decision-makers in regulated UK businesses across the legal, property, finance and accountancy sectors.
The research was commissioned by SmartSearch, a UK provider of anti-money laundering and digital compliance solutions.
The survey found that firms in financial services (44%) are most likely to rely on client relations over vital sanctions and PEP screening, closely followed by accountants (42%) and property firms, including estate agents (40%).
More than a third of legal firms, including solicitors and conveyancers (37%) believe that long-term client relationships negate the need for due diligence. Almost the same number of legal firms (32%) said it was because they trust their clients – nearly three times as many as the 2022 findings (11%).
The findings follow warnings from authorities, including the Joint Money Laundering Intelligence Taskforce, urging firms to implement robust checks to avoid becoming enablers for sanction evasion.
A recent red alert from JMLIT identified legal professionals, financial advisers, estate agents and intermediaries as the most susceptible to enabling evasion. It comes as Designated Persons utilise associates, relatives or close contacts to transfer assets and protect their personal or commercial holdings.
Guy Harrison, CEO of SmartSearch said: “Complacency is all too often the enemy of compliance and, while trust is important in any client relationship, it shouldn’t trump the robust checks required by law. This is especially true given the UK’s current stance on sanctions and the opportunity for existing clients to suddenly come under greater scrutiny. Without necessary screening and real-time intelligence, it’s worryingly easy for regulated firms to be unknowingly complicit in sanction evasion.”
*The research was conducted by Censuswide with a sample of 501 compliance decision-makers who take on new individual customers and new business clients. The survey fieldwork took place between September 11 and September 18, 2023. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles and are members of The British Polling Council.
We hope you enjoyed reading this article
If you would like unlimited access to AML Intelligence premium articles, newsletter delivered twice a week, access to our Global Bank Fines and Penalties database, free access to Boardroom Series events and much more, select one of our subscription options and become a subscriber!
