UK firms ignoring money-laundering ID checks

Two-thirds of UK businesses are flouting new anti-money-laundering legislation and risking fines or jail sentences by failing to use proper ID checks for transactions.

The regulations, which came into effect last month, require firms to be able to prove the identity of customers when handling cash transactions of €15,000 or more and to keep records of identification evidence for five years. Directors of companies not compliant with the law are open to legal action and could face up to two years in jail.

The BT study, carried out by Coleman Parkes Research, quizzed 150 CEOs from a sample of the UK stockbrokers, IFAs, property advisers, luxury-goods companies and car dealers.

Only 33 per cent said they are currently compliant with the regulations, leaving two-thirds flouting the law. A third also admitted they do not have a defined and documented process for checking individuals' identities and a third of all respondents were unable to state the threshold value of goods at which a money-laundering check should take place.

A quarter of all respondents have no identity-checking process in place at all and have no plans to introduce one - particularly worrying when one in five also believe that money laundering will increase significantly during the next couple of years.

Compliance is highest amongst financial services companies, at 62 per cent, compared to only three per cent of car dealers.

Peter Gandy, head of web services at BT Global Services, said in a statement: "The new extended money-laundering regulations make it a legal requirement for companies to have robust systems for customer validation and record keeping in place. However, our research clearly highlights that organisations are confused about how to achieve compliance, and that there is a worrying lack of confidence in identity verification systems that are already in place."