A new study suggests that intermediaries who are not intermediaries at all could be at a higher risk of financial fraud than intermediaries with whom they share a single-party, high-frequency bank account.
In the UK, for example, intermediaries can be fined up to £5,000 per offence for making money-laundering schemes.
But when they’re also intermediaries of other types, such as companies, banks and credit unions, that risk is even higher.
In a new study, the research group at the University of Sussex (UK) found that, when it comes to intermediaries, people are generally more likely to trust those who are intermediaries.
The research is published in the journal Science Advances.
The researchers analysed data from more than 1,600 British people between 2006 and 2012 and asked them which types of intermediaries they trusted more.
The main takeaway is that people trusted people who were not intermediars at all, but trust people who are.
In other words, people were more likely than not to trust someone who they know and trust to do the right thing.
The team’s analysis also found that people tended to trust intermediaries over those who they did not.
They also found the same relationship between trustworthiness and trustworthiness in the UK as they did elsewhere.
“When we look at the UK we find that the public trust the intermediaries more than the intermediates,” says co-author Professor Ben Balfour.
“But when we look in the US, that relationship is reversed.
Americans trust intermediers more than intermediates.
But they trust intermediates over intermediaries almost equally.
This is a result of the US being an increasingly complex, regulated economy.”
The UK’s Financial Conduct Authority has long struggled to crack down on fraud because it doesn’t recognise intermediary-type banking.
And it’s still unclear why people are willing to trust them, even though there’s a strong risk that intermediary banking can be used to launder money.
In June this year, the UK’s financial regulator announced it would take the lead in cracking down on money laundering and terrorist financing by moving towards a “safer, more accountable” financial system.
But Balfours team believes the current system is not working.
It points out that many of the UK government’s “high-level” regulators, for instance, are only in their mid-20s, and many are new to the role.
Balfors team is currently conducting further research on whether trustworthiness varies across people’s economic, educational, political, social and geographical backgrounds.
In future, he hopes to use data to develop a new system for monitoring trustworthiness.
“In the UK it’s all about trustworthiness,” says Balfores team leader Professor Mark Porter.
“We want to look at trustworthiness across people, and we want to use that as a basis for regulation.”
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