Collaboration central to new UK bill designed to fight financial crime

In its bid to become a global fintech centre and financial services leader, the UK has inadvertently made itself a larger target for the financial criminals, experts argue.

To combat this, the UK government is doubling down on efforts to fight financial crime and money laundering through the Economic Crime and Corporate Transparency Bill, which is nearing its final stages in Westminster. The bill aims to overhaul how companies and financial institutions can more effectively fight the financially-motivated bad actors.

The legislative push finds its roots in the Economic Crime, Transparency, and Enforcement Act of 2022, introduced following the Russia-Ukraine war. The legislation empowered the government to bring in sanctions and investigate illicit activities; established an overseas entity register for UK properties owned by overseas criminals, and brought updates to the Unexplained Wealth Order.

The measures addressed a significant vulnerability in the financial system: the spread of financial crime and money laundering, often involving a complex web of falsified corporate accounts.

Adam McLaughlin, the Director, Global Head of Financial Crime Strategy, and AML SME at Nice Actimize, a financial crime, risk, and compliance solutions provider, has explained how the disease of fincrime is of critical concern. He has noted that the UK government is now targeting this issue with the Economic Crime and Corporate Transparency Bill.

In McLaughlin’s eyes, the bill comprises three core pillars. The first encourages transparency through data sharing, aiming to remove confusions in existing legislation that hinder “private-to-private” data sharing among financial institutions. 

The second introduces a secure-access third-party utility for businesses to collaborate and share information regarding suspected fraud cases. This element is expected to significantly enhance threat identification.

The third pillar focuses on a shake-up of Companies House. The new measures would oblige both existing and new registrants to verify their identities. It grants new powers to Companies House for scrutinising, removing, or declining submitted information and facilitates sharing of evidence related to fraudulent behaviour with law enforcement.

Additionally, the bill reflects a commitment to keeping pace with digital technology advancements, aiming to provide more reliable and accurate financial information.

Despite promoting data sharing, the bill also addresses concerns about data standardisation. Ensuring that data exchanged between entities is uniform is essential for effective implementation. Data standardisation involves common data structures, technical and security protocols, and legally supported document-driven procedures. 

The bill passed its third reading in the House of Lords in July and is set for further consideration in September. If ratified into law, it could take effect later this year or in early 2024.