Several banks are in advanced discussions with British law enforcement and government agencies to establish two groundbreaking pilot programmes aimed at sharing intelligence on significant financial crimes like money laundering and terrorism financing. These initiatives are expected to launch within a few months, according to sources.
These efforts come as Britain intensifies its actions against economic crime, which politicians estimate costs the economy approximately GBP 350 billion (USD 450 billion) annually. Additionally, Western countries have imposed sanctions on individuals, companies, and industries in response to Russia's invasion of Ukraine.
Traditionally, banks have been hesitant to share customer data due to concerns about violating stringent British and global data protection and privacy laws. Such breaches could lead to litigation from customers whose accounts have been frozen during investigations.
Nevertheless, these trials are aligned with an upcoming UK law that will play a central role in the crackdown on financial crime, aiming to address Britain's reputation as a global ‘destination of choice’ for illicit funds, as described by members of parliament.
According to British anti-corruption officials, banks play a crucial role in combating money laundering and fraud. Consequently, they greatly appreciate any new methods that facilitate the exchange of information to identify criminals, while also upholding privacy rights. Reuters.com reports that two of the prominent banks in the UK, Lloyds and NatWest, are actively involved in these data trials.
The first pilot involves around six banks and Britain's National Crime Agency (NCA), and would allow companies to share data if they identify multiple flags about potential serious financial crime, according to sources cited by Reuters.com.
The second pilot would involve launching a broader database for suspected economic crime and involves around eight banks, Britain's interior ministry (Home Office) and bank lobby group UK Finance. A spokesperson for the Home Office said the government's plans to combat economic crime would ensure a co-ordinated response between the government, law enforcement, and the private sector.
Cross-referencing data on high-risk customers would enable banks to detect patterns of criminal behaviour and prevent isolated investigations of suspicious activities. While existing laws allow information sharing for small-scale fraud, banks are hesitant to share data on large-scale financial crimes like money laundering due to concerns about data protection rules.
The two pilot programmes aim to address this issue by facilitating extensive information sharing among banks, expanding public-private data initiatives, and establishing a platform similar to Britain's national fraud database for serious economic crime. These pilots are expected to be launched in October 2023, alongside the economic crime and corporate transparency bill, which aims to provide regulated firms with the necessary flexibility to increase data sharing. However, it is emphasised that appropriate safeguards are crucial for information-sharing endeavors, as stated by a financial crime investigations lawyer.
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