Financial crime is evolving at speed, and artificial intelligence is once again the driving force. Fraudsters are using AI to build ever more convincing synthetic identities, plausible addresses and employment histories stitched together from publicly available information. Yet many firms are still fighting back with manual tools.

The 2026 SmartSearch Compliance Survey found that more than half of firms across legal and financial services continue to carry out identity checks by hand.

The pressure is mounting on several fronts. Regulatory expectations are rising, while sanctions lists, watchlists and other risk indicators are changing more often than ever. For regulated businesses, ongoing monitoring has become central to keeping an accurate picture of customer risk across the entire relationship.

Ongoing monitoring is not optional. Under Regulation 28(11) of the UK Money Laundering Regulations 2017, firms must continually scrutinise business relationships, including transactions and activity, and keep customer due diligence information current and relevant.

In practice, this covers transaction monitoring, screening against sanctions and PEP lists, refreshing due diligence, applying enhanced checks to higher-risk clients, reassessing risk when circumstances shift, and reviewing and reporting suspicious activity. A customer deemed low risk two years ago could since have become a politically exposed person, been sanctioned or changed their business model entirely.

However, monitoring more often brings a costly side effect. Detection systems are deliberately sensitive, as it is better to flag something harmless than miss genuine wrongdoing. The consequence is that legitimate behaviour frequently looks suspicious. A small business receiving regular payments from overseas suppliers might trip cross-border rules, while a customer shifting funds between their own accounts could resemble layering.

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