As the European Union moves to remove jurisdictions such as the United Arab Emirates and Gibraltar from its official anti-money laundering (AML) “grey list” compliance specialist SmartSearch is warning regulated firms not to lower their guard.
The EU’s decision, which mirrors a recent move by the Financial Action Task Force (FATF), comes in recognition of improvements in these jurisdictions’ AML frameworks.
However, the change also reduces the level of mandatory due diligence required on transactions involving these regions.
And this issue is raising concerns among compliance professionals that firms may be lulled into a false sense of security.
FALE SENSE OF SECURITY
Nicola Gifford (main picture), General Counsel at SmartSearch, says: “These types of regulatory shifts can create a false sense of security.
“Just because a jurisdiction is no longer on a watchlist doesn’t mean the risks have disappeared.
“It is still vitally important that regulated firms run thorough checks on new clients to understand who they’re dealing with, especially in high-risk regions or emerging markets, regardless of whether they are officially on or off a ‘grey list’.”
LIABILITY ISSUE
Gifford warns that delisting doesn’t absolve firms of responsibility.
And she says: “Delisting doesn’t remove your liability. If you onboard a high-risk client because your due diligence wasn’t thorough, you could face regulatory scrutiny, reputational damage, or worse.”
SmartSearch’s technology is designed to help firms go beyond basic checks.
“At SmartSearch, we help firms go beyond surface-level checks to truly understand who they’re onboarding, especially when dealing with clients from higher-risk regions,” she adds.
FUZZY MATCHING
“Our integration with LSEG enables powerful fuzzy matching, so even if a name is misspelled or slightly altered, potential red flags don’t slip through.
“We combine that with enhanced adverse information screening from over 100,000 trusted sources to uncover reputational or financial concerns that may not appear on official registers. And with real-time watchlist screening for sanctions, PEPs and enforcement actions, firms can meet global compliance standards with confidence.
“This multilayered approach ensures that even if a country is no longer flagged, you’re still asking the right questions about the individuals and entities behind the transaction.”
