We are frequently asked about growth opportunities in the UK market, mainly by UK SMEs who are looking to expand their product offering or find new customers for existing products.

One of the key areas that we find ourselves highlighting particularly at the moment is KYC (know your customer) and AML (anti-money laundering).

‘Know your customer’ guidelines require professional firms to check the identity, suitability and also the risks involved with managing a business relationship.

Anti-money laundering refers to the regulations and processes needed to stop criminals from hiding illegally obtained funds under the guise of legitimate income.

In our opinion these two key areas offer significant opportunities to UK SME today. And here’s why:

The World of Digitalisation

Despite its devastating impact on the global economy, COVID-19 has been credited with accelerating the UK’s race towards digitisation. During lockdown, thousands of new bank accounts and other accounts were opened, there was a dramatic increase in online transactions and businesses stopped handling hard-copy documents.

These trends are set to continue, not because of fears of future virus outbreaks, but because businesses and consumers have found that digital is faster, cheaper, better, more transparent and more efficient.

Right now, the impact of COVID-19 means that around 22% of jobs in the UK are at risk. This is not the case with regulatory compliance and KYC roles.

According to leading recruitment firm, Robert Walters, regulatory compliance positions are seeing growth of around 56% and KYC roles of around 52%.

Supply Chain Options

Such growth is leading to the rapid expansion of specialist compliance firms, and also compelling buyers of compliance solutions to consider new technological supply chain options.  There has never been a better time for UK businesses with KYC and AML capability to carve out lucrative home-market niches.

Additionally, as business leaders are being charged with building more risk-resilient infrastructure, re-examining operational challenges, identifying gaps, and enhancing technologies that facilitate remote working. They want better and faster client onboarding to build single-customer-view compliant models, and to address high levels of fraud.

KYC and AML technologies will play a key role in solving these problems.

The Financial Conduct Authority (FCA) is an avid adopter of innovation and maintains a close relationship with the fintech sector. It is recognised internationally for excellence in its approach to regulatory and digital sandboxes and its leadership role in driving open banking.

From a regulatory perspective, it operates what might be considered a somewhat hands-off approach, providing regulatory frameworks and then standing back to focus on the outputs.

This risk-based methodology places increasing responsibility on individual firms to take independent, proactive measures with regard to compliance.

Added to this is the 2019 amendment to The 2017 Money Laundering, Terrorist Financing and Transfer of Funds Regulation to extend the scope of the regulated sector and to enhance customer due diligence, (with further amendments expected thanks to the increase in online transactions and developments in payments technologies), and professional and financial services firms find themselves in what one of our banking contacts described as ‘the perfect regulatory storm’ and a wonderful opportunity for agile small businesses.