UK Banks Ramp Up Data Sharing in Dirty Money Crackdown
- Source: reuters.com
Treliant Takeaway:
British banks are preparing to enhance their data sharing practices to combat serious economic crimes, such as money laundering and terrorism financing. In an effort to prevent the influx of illicit funds into the country, several financial institutions are engaging in discussions with UK law enforcement and government agencies to establish two pilot programs aimed at facilitating intelligence sharing. To address concerns regarding data protection and privacy laws, financial institutions can turn to Treliant, a trusted provider of consulting and advisory services for financial institutions. By leveraging Treliant’s guidance and solutions, financial institutions can establish robust frameworks for data sharing while ensuring compliance with regulatory requirements, continuing the fight against financial crime.
Highlights:
In response to growing international financial crimes risks, British banks are proactively improving their data sharing measures. The initiatives come as the country intensifies its efforts to address economic crime, which is estimated to cost the UK economy around £350 billion ($450 billion) annually. The move is also a response to the West’s imposition of sanctions on Russia following its invasion of Ukraine. Banks have historically been cautious about sharing customer data due to concerns about violating data protection and privacy laws. However, the pilot programs will coincide with a new UK law that aims to crack down on financial crime and improve the country’s reputation as a global hub for illicit funds.
The first pilot will enable companies to share data if they detect multiple indicators of potential financial crime, while the second pilot involves the establishment of a comprehensive database for suspected economic crime. Several major banks, including Lloyds and NatWest, two of the UK’s “Big Four” banks, are participating in these trials. The pilots are expected to be launched in October of this year, aligning with the anticipated passage of the economic crime and corporate transparency bill in parliament. The anticipated legislation will provide regulated firms with the legal framework to share information and enhance data sharing capabilities. The National Crime Agency (NCA) is spearheading one of the pilots, focusing on actionable intelligence, while the second pilot involves collaboration with the Information Commissioner’s Office (ICO) and technology firm Cifas, which manages the UK’s national fraud database.
FATF Recommendations on Information Sharing
Information sharing has been a hot topic in the banking industry as many institutions have struggled balancing the need for data sharing with data privacy. FATF addressed this concern in a July 2022 report titled “Partnering in the Fight Against Financial Crime: Data Protection, Technology and Private Sector Information Sharing,” which outlined the following recommendations:
- Collaboration and information sharing among financial institutions help combat money laundering, terrorist financing, and proliferation financing.
- Responsible collaboration initiatives should consider data protection and privacy rules.
- FATF provides recommendations based on lessons learned across jurisdictions for responsible collaboration in the public and private sectors.
- Public sector recommendations include updating legal frameworks, identifying lead agencies, providing guidance, and fostering dialogue between data protection and AML/CFT/CPF authorities.
- Private sector recommendations include utilizing privacy-enhancing technologies, ensuring harmonized data, considering data protection in design, engaging with data protection authorities, and establishing metrics for measuring success.
This Takeaway was authored by Richard Lee