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A new release by SmartSearch, a leading provider of AML software in the UK, has revealed that 22% of legal firms admit to not checking that new customers are not subject to sanctions or Politically Exposed Person (PEP) lists.
The figure comes from a survey of 500 decision-makers in the legal, property and finance banking sectors conducted in May.
Lawyer and SmartSearch managing director Martin Creek pointed out that these firms run the risk of a damaging breach of regulations. Creek described negligent firms as “giving a green light to Russians looking to circumvent sanctions” and reiterated that an unintentional breach of sanctions is not a valid defence.
The new information comes on the back of another recent report from the Commons Foreign Affairs Committee showing that the government is still struggling to tackle wealthy Russians who are using UK organisations to launder money. 2,500 sanctions had been placed against Russia by the UK prior to the beginning of the February invasion of Ukraine, which has resulted in a further 7,200 individuals and 1,250 entities being added to the sanctions list.
The survey forms part of SmartSearch’s ongoing Electronic Verification Uncovered campaign. Focused on digital onboarding, the campaign is pushing firms to switch to electronic verification in order to avoid doing business with legally problematic clients.
