The UK has recently taken a decisive step in combatting economic crime with the enactment of the Economic Crime and Corporate Transparency (ECCT) bill. Building on the foundation laid by the 2022 UK Economic Crime Act, the ECCT, which received royal assent on October 26, 2023, aims to bolster the nation’s financial system against illegal activities such as money laundering and its related predicate offences.
In a recent post by Moody’s Analytics, the firm outlined how the bill could produce a ‘paradigm shift’ for anti-money laundering in the UK market.
The ECCT bill introduces transformative reforms, especially for risk and compliance teams within UK financial institutions. A key reform is the overhaul of Companies House, enhancing the transparency of UK company ownership.
This reform mandates identity verification for all company directors and document deliverers to Companies House, ensuring data accuracy. Such changes will likely prompt risk and compliance teams to update their due diligence processes, offering a clearer view of beneficial ownership and elevating shell company risk detection.
Additionally, the Act targets misuse of limited partnerships, specifically Scottish limited partnerships, by imposing stricter registration requirements to boost transparency. This will necessitate updates in compliance frameworks and third-party risk assessments.
The ECCT bill equips law enforcement with enhanced powers to seize and recover crypto assets linked to criminal activities. This development necessitates a review of due diligence procedures related to crypto assets, including fund sourcing, wealth origins, supply chain scrutiny, and transaction monitoring.
The Act also amplifies anti-money laundering capabilities, encouraging better information exchange on suspected money laundering activities and related offences. Consequently, risk and compliance teams must revise their information-sharing protocols and work more closely with law enforcement.
As the bill progressed through Parliament, key amendments were added, including an offence for failing to prevent fraud, holding institutions accountable for profiting from fraud, and reforms to corporate criminal liability laws for economic crimes.
These changes highlight the need for risk and compliance teams to enhance fraud prevention tactics, reassess organizational liability risks, and improve compliance training and communication.
Want to read the full post? Click here.
Keep up with all the latest FinTech news here.
Copyright © 2023 FinTech Global
