5MLD? Staff not being trained…
Nearly 40 percent of UK businesses have deliberately abandoned their attempts to open a new banking services in the last year due to “slow due diligence”, according to a survey by regtech specialist Encompass Corporation, which pointed to clunky, time-consuming Know Your Customer (KYC) processes.
The survey, conducted between March 18-19, just after the Chancellor announced a £330 billion rescue package due to support UK companies through the Covid-19 crisis, asked businesses about the challenges they face in accessing financial support, as well as attitudes towards cyber security and regulation.
Wayne Johnson, CEO and co-founder, Encompass said: “Everyone recognises that it’s vital to ensure correct background checks on new customers to prevent money laundering and criminal activity, but these checks should not act as a hindrance to legitimate companies gaining access to [credit and services].”
Needless to say, Encompass has “skin in the game” — the company automates the KYC discovery process for corporate and banking customers — but the report echoes concerns raised elsewhere. (The founder of award-winning gold trading startup Goldex, Sylvia Carrasco, recently told Computer Business Review that despite her company having hugely robust KYC processes in place it was initially nigh impossible to open a business bank account with one of the established High Street banks in the UK.)
While 81 percent of organisations said they are confident in their understanding of exposure to financial crime and that they already have the processes in place to address it, 44 percent said they did not regularly put customers and suppliers through formal Know Your Customer (KYC) processes, with well over half (60 percent) saying they hadn’t trained staff on Fifth Money Laundering Directive (5MLD) compliance.
5MLD’s tough new rules on anti-money laundering and counter terrorist financing came into force on January 10, 2020. They include the need for more robust efforts to identify the beneficial owners of businesses, and a reduced threshold for customer due diligence (CDD). Meanwhile, nearly one third of businesses (29 percent) said they now trust challenger brands and fintech providers more than traditional banks.
Is the government’s 5MLD guidance clear to you? Unimpressed? Confused? Let us know your experiences by emailing our editor ed(.)targett(@)cbronline(.)com