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Do your Identity Checks Really Establish Customer IDs?

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In the UK, financial services regulation is stringent. Expectations are high, within the industry, and more broadly in the economy and society too. Non-compliance can have severe consequences, including fines, reputational damage and, potentially, the loss of the right to operate. For Money Transfer Businesses (MTBs), the environment necessitates rigorous identity verification processes to prevent financial crime and maintain industry integrity.

An expanding market, with growing risks to match.

The UK’s remittance market is expanding, with growth in money transfers to more destinations. While the Indian subcontinent remains a primary recipient, other regions – such as West and sub-Saharan Africa – are increasingly important. This brings heightened responsibilities for MTBs, who must ensure accuracy in Know Your Customer (KYC) checks and continuous transaction monitoring to mitigate risks associated with financial crime.

Criminals are adept at exploiting financial systems to move money illicitly. Bad actors can abuse the innocent process of sending money abroad by using false identities or digital mule accounts. These activities enable money laundering, sanctions evasion and terrorism funding on a global scale. It’s essential, therefore, that identity verification systems go beyond simple document checks to achieve a consistently robust standard of protection.

Identities aren’t what they used to be

The effectiveness of an MTB’s onboarding process hinges on the authenticity of identity proofs provided by customers. Basic checks of driving licences or passports are no longer sufficient. Deeper verification is necessary to ensure the legitimacy. A study by Censuswide in 2022-2023 revealed that up to 8.6 million people in the UK might be using fake, fraudulent, or stolen identities to access goods, services, or credit. Not all of this activity will be relevant to money transfer services but the statistic highlights the scale of the challenge facing MTBs.

In-depth ID verification

Industry professionals understand the importance of identity verification, but the challenge lies in the implementation. How, then, to manage the verification process swiftly, and how to ensure the authenticity of identities? The answer to the first question is automation, a common feature in many compliance services. Automated systems streamline the verification process, making it quicker and more efficient.

However, ensuring the authenticity of identities requires more than just automation. A comprehensive compliance service must verify the information provided and check for signs of stolen or sold identities. This deeper level of scrutiny not only protects individual businesses but also enhances the security of the entire industry.

MTBs  – will you accept the challenge?

Not all providers offer such thorough services. When MTBs review their compliance arrangements, they should seek out providers that offer this extra layer of security, and specifically those which have been built with a high level of future-proofing.

Compli, from Essiell Compli, is a good example of a leading provider in this field. Its Identifier service excels in identifying potentially stolen and resold information. By linking unique personal details, such as email addresses, mobile phone numbers, and identification numbers, to a single Global Person, the Identifier Service ensures robust initial security and continuous real-time compliance monitoring.

Whichever supplier is chosen, genuinely effective identity verification is essential for MTBs to safeguard against financial crime. As threats evolve and become more sophisticated, so must the actions taken to forestall them. Only the best providers will offer the tools necessary to enhance security and maintain compliance, now and in the future.

By Declan Morton, staff writer at Essiell Compli.


For reference: UK beats Saudi Arabia in diaspora inflows, Constant Munda, Business Daily Africa,  9th May 2024; Over eight million people in the UK using dishonest identities, CBG plc, January 2023.

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