High Street firms are failing to check client identities
High street law firms are leaving themselves wide open to money launderers, according to new research carried out by conveyancing case management software provider Conveyance Link.
Despite the well publicised increase in identity fraud in the UK, many small law firms still do not have rigid enough systems and procedures in place to check and validate clients' IDs. According to a survey of 400 conveyancing law firms carried out by ConveyanceLink, nine out of ten (91%) admitted they photocopied documents such as passports and driving licences as proof of identification but did not check or verify them against a number of official databases.
When the firms were shown a passport and driving licence and asked if they were genuine or fake, almost three quarters (71%) chose incorrectly. Of the firms that were correct, most admitted they made an educated guess.
Malcolm York, Director of ConveyanceLink, comments: “This survey illustrates how difficult it is to tell a fake from a real document unless you have a high level of expertise in such areas. What is concerning is the number of law firms that are still relying on the fact that if a client can produce a number of different forms of personal identification then they must be authentic.
“The Money Laundering Regulations 2003 stipulates that all persons carrying on relevant business must establish such procedures of internal control and communication as may be appropriate for the purpose of forestalling and preventing money laundering. This means, according to ML Regulations 2003, that law firms must obtain satisfactory evidence of the identity of each client which clearly in most cases they are not doing.
“It is vital that law firms recognise that with the vast improvement in the quality of fake ID on the market, and the ease of obtaining such documentation over the internet, that they need to ensure that their verification procedures are watertight and comprehensive.”
To highlight how easy it is to obtain fake ID, ConveyanceLink carried out an online research project and located a website called www.foolthem.com where documentation including driving licences, passports, P60s and pay slips could be bought for as little as £15.
ConveyanceLink has been working closely with its clients to tackle the problem of identification verification and has just launched a system called ID Your Client in collaboration with leading data service provider GB Group. The new system – www.idyourclient.com – is an online anti-money laundering and consumer identity verification service which will help to protect solicitors from identity fraud. The system will enable the user to actually verify a client's ID against secure online databases, therefore providing secure and trustworthy information to solicitors.
Malcolm York adds: “This system will enable solicitors to go further than simply taking photocopies of passports and driving licences to identify clients. IDs will be checked against more than 15 different data sources to verify first if the person's name and address exists and then if they appear on one of the known lists of terrorists or money launderers. A result will be received almost instantaneously and in a format that is easy to understand.”