With Stamp Duty Land Tax (SDLT) rates changing from the beginning of April, home buyers are keen to complete their purchases before the price jumps up – the race to buy is set to accelerate in the opening months of the year. Naturally, this puts added pressure on conveyancers to complete the necessary steps ahead of exchange and completion.
One element that can take longer than all parties want is ID verification (IDV) and anti-money laundering (AML) checks, especially if these checks are completed manually. However, with fraudsters increasingly targeting busy conveyancers – and regulators hot on the heels of those who are non-compliant – this part of the conveyancing process should never be cut short.
So, how can conveyancers ensure timely IDV checks without cutting corners? This is where a health check comes in.
- Conduct an internal audit
The first step to improving a process is to evaluate how it is currently carried out. An internal audit has a key part to play in assessing a firm’s controls, processes and policies and thereby preventing illicit activity such as money laundering. Consider how effective, efficient, and streamlined current IDV checks and AML controls are?
To mitigate risk, the audit should initially look to identify any gaps and weaknesses in these compliance tasks. This could range from spotting time-consuming methods for checking identities against sanctions lists to noting a broader lack of awareness in the firm about financial crime and the dangers of not conducting stringent IDV checks.
However, the large sums of cash that can be involved in purchases and the volume and scale of conveyancing transactions make it both more important to mitigate risks and also more challenging. Even robust compliance policies can fall short if conveyancers are not equipped with the necessary tools to effectively onboard and monitor customers.
- Evaluate IDV processes
The traditional process for IDV involves collecting official documentation like a photographic ID and then manually verifying both the identity of the prospective customer and the documentation shared. But the Face ID technology present on so many of our phones is a daily reminder of the accuracy and ease of facial recognition in today’s world. So, when it comes to onboarding customers and verifying identities, why wouldn’t a conveyancer look to adopt such technology?
By employing this software, conveyancers can automatically verify the individual using biometric facial recognition against their ID document, which itself has been automatically verified as authentic by the platform in real time. Ask yourself, does the firm have the tools that enable conveyancers to do this? Or is this still a complex, time-consuming and inaccurate process?
Moreover, it’s integral to evaluate the different compliance tech products currently used – if any – those available on the market, and any accompanying features they offer. Can they connect to real-time official data sources like the electoral roll and sanctions lists to ensure more robust compliance checks if desired? Do they securely store this data in the cloud, so it’s safe but accessible when needed?
- Ensure continued compliance
You can have all the tools and processes in place, but if there is a lack of internal expertise, knowledge and awareness amongst conveyancers, then compliance can still falter. If employees don’t know how to efficiently report red flag activity flagged by the IDV app, for example, or aren’t aware of the risks posed by sanctioned persons, then bad actors and money launderers will still find ways to exploit the conveyancer firm or individuals.
Therefore, as well as carrying out an internal audit and assessing the technology in play, conducting regular training sessions and building an awareness of compliance across the company is crucial. This enables continued compliance beyond any changes that might be made from an initial health check and, crucially, forms a more robust line of defence that keeps bad actors at bay.
Timely IDV keeps conveyancers’ compliance healthy
In a similar vein to COVID when the SDLT holiday was introduced, the looming changes to SDLT rates from April are likely to see a surge in home buyers looking to complete their purchases before the deadline. But this also presents an opportunity for fraudsters and money launderers hoping to capitalise on a more pressurised and busy market.
The internet, now joined by generative AI, presents an array of inventive ways for bad actors to adopt fake identities, and conveyancers must be on guard to mitigate these risks. IDV cannot be rushed or done half-heartedly – but it also needs to be completed in a timely manner to meet demand and preempt threats.
As such, it’s a good time to carry out an IDV health check. This can involve conducting an internal audit to assess current IDV and AML processes, evaluating IDV checks and whether the right technology is in place to enable an efficient and accurate process, and then ensuring continued compliance across the firm. Ultimately, a healthy IDV process means a healthy and compliant business.
Tim Barnett is CEO of Credas
