These companies run a serious danger of financial crime, including money laundering and sanctions violations, due to the irregular monitoring. This concerning figure was found in the most recent SmartSearch study, which was completed in September 2023 and involved more than 500 compliance decision-makers from a variety of industries, including accounting, finance, law, and real estate.

This number represents an 8% rise over the results from the prior year, suggesting a concerning pattern in the compliance procedures used by enterprises subject to regulation. In particular, the property industry stands out as the most susceptible, with 95% of businesses failing to conduct daily inspections. The financial services industry follows closely with a 94% non-compliance rate, up 6% from 88% in 2022. Accounting and law firms are also falling behind; 88% of them fail to conduct the daily due diligence that should be done on their clients.

This kind of oversight can have disastrous results. The managing director of SmartSearch, Martin Cheek, highlights the increasing intricacy of financial offenses and the increasing regulatory demands. Cheek emphasizes how important it is for businesses to implement more efficient compliance measures in order to reduce threats to their finances and reputation. He draws attention to the serious legal ramifications of violating sanctions, which can result in crimes carrying sentences of up to seven years in jail.

Cheek supports the implementation of a perpetual KYC (pKYC) paradigm with electronic verification (EV). With this strategy, clients' risk profiles are continuously assessed and updated through the use of real-time data and intelligence, including politically exposed person (PEP) screenings and penalties. A model like this raises the accuracy of client assessments while lowering the likelihood of noncompliance by a large margin.

Implementing a pKYC model and moving toward digital compliance tactics are critical steps for companies trying to stay ahead of the regulatory curve. The shift to digital solutions ensures that businesses may continue to operate with integrity and compliance while reducing the risks connected with financial crimes.