How Has Brexit Affected KYC Compliance?

Brexit developments are a subject that has been followed with curiosity the world for the anti-money laundering sector since the beginning of 2021. Britain's departure from the European Union and announcement of Brexit decisions brought many regulations and changes for businesses in the UK. In recent years, companies in the UK have been warned that the new rules brought by Brexit reveal new fraudulent activities for cybercriminals. However, despite the official exit of the UK from the EU, there is still no clarity on the new rules that many businesses will implement.


Therefore, the fact that fraudsters take advantage of this period of uncertainty is an indication that companies need to act extra cautiously. In the process, businesses may be exposed to unexpected calls, malicious messages, or fraudulent activities in various fields such as fake identity. They must take the necessary measures against these activities and keep their money laundering and terrorist financing prevention practices up to date. 


Have Businesses Been Under the Risk? 

Following its new research, Barclays revealed a 20 percent increase in financial scams implemented in the last five months, taking advantage of the uncertainty created by COVID-19. 


According to the analysis, 42 percent of all fraudulent activities carried out since January is the method of impersonating real organizations to obtain personal or banking information. However, the method's usage rate has increased by 79 percent in the past five months. 


Another method most frequently followed by scammers was website fraud, which involves 25 percent of fraud attempts. Customers are directed to get products that are not available by creating a fake website. 


Finally, bill and order fraud accounted for 18 percent of fraudulent activity. Fraudsters could impersonate suppliers by accessing their vendors' bank details via email, potentially transferring large sums of money to their accounts. 


The Importance of AML and KYC Regulations on Brexit 

Considering all of this, it becomes clear that businesses in the UK need to be monitored and encouraged to comply with Anti Money Laundering (AML) and Know Your Customer (KYC) laws. Otherwise, companies that do not comply with the law may be subject to strict fraud and financial penalties. 


The UK's exit from the EU is critical for organizations to know who they are cooperating in world trade. Frauders don't just pretend to be customers; They take on the role of CEO, supplier, even businesses. Therefore, every institution interested in financial activities must adapt to local and global trade, be aware of the changing AML / CTF regulations and apply KYC laws most appropriately. 


Many economists interpreted Britain's decision to leave the European Union as possible divisive effects between the EU and the UK. 


At this point, essential assumptions are made for EU-linked firms in the UK. The UK had to comply with EU AML / KYC regulations as a member state. However, due to the post-Brexit EU decision, the UK will no longer have access to the simplified identity verification system. Therefore, it will need to develop advanced due diligence controls to accommodate new AML changes and requirements.

 

Finally, for many companies in the UK and Northern Ireland under Brexit decisions, the degree of change will depend on the current European footprints. For businesses subject to AML laws, especially banking, finance, insurance institutions, and all institutions affiliated with the mobile and online gaming industry, it is necessary to take steps to understand the content and scope of Brexit fully. 


It is expected that fraudsters taking advantage of the uncertainty of the Brexit process will continue to pose a threat throughout 2021. It is now even more critical for UK businesses to comply with the required AML / KYC regulations. 


Realise Your KYC Checks Easily with Sanction Scanner 

With the new regulations of Brexit, the compliance programmers responsibilites increased considerably. Businesses must adopt a risk-based AML compliance solution to comply with new regulations and avoid fraudulent activity resulting from uncertainty. Through advanced AML compliance software, you can know your customer, efficiently perform your customer due diligence, advanced due diligence processes, and avoid possible risks. 


Sanction Scanner offers PEP and Adverse Media Screening Services. Thus, businesses can perform KYC checks efficiently and automatically within seconds. For more about our AML Softwares that offers end-to-end solutions, you can contact us or request a demo. 

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