Payment ecosystems that effectively share data can reduce economic crime, study shows

By Puja Sharma

-Global estimates suggest $2 trillion is laundered annually and fraud is now at epidemic levels.

-Volume and complexity of laws and legislation cited as the key issue impacting regulated entities’ data sharing to reduce economic crime.

-The Payments Association’s research sets out opportunities in sharing data between public and private entities, capitalising on the UK Government’s focus on economic crime and fraud.

The Payments Association, which celebrates innovation and collaboration across the payments industry, has released a whitepaper examining the current arrangements for sharing data to prevent economic crime in the UK, citing collaboration between regulated entities and between the public and private sectors as key to progress on data sharing to prevent economic crime. The report also presents the changes that may be introduced by the relevant provisions of the Economic Crime and Corporate Transparency Bill, now making its way through parliament.

Global estimates suggest $2 trillion is laundered annually and fraud is now at epidemic levels. Illicit finance has become one of the world’s most prevalent businesses – “economic crime is, in short, the crime of our times, and is increasingly being recognised as a threat to the UK’s national security”.  With the government having a firm spotlight on economic crime and fraud, the whitepaper, entitled ‘Data Sharing to Prevent Economic Crime: Why you can now share data with confidence’, sets out clear recommendations.

Michael Mueller, Chief Executive Officer at Form3 – Benefactor for Project Financial Crime at The Payments Association, said, “The effective use of data sharing within the payment ecosystem can deliver a seismic shift in collaboratively combatting economic crime. This whitepaper reflects the current barriers to data sharing that financial institutions in the UK face as well as the opportunities that can be realised when these can be overcome.”

The whitepaper also surveyed the membership of The Payments Association and identified several key issues which prevent the effective and privacy-conscious sharing of data to prevent economic crime: balancing data privacy and the need to share data, siloed data within firms, inconsistent formatting of data, criminal exploitation of technology, the cross-border nature of economic crime and the multiple data-handing laws across borders.

Jane Jee, Lead of Project Financial Crime at The Payments Association, added, “The UK lacks the infrastructure to effectively defeat fraud and economic crime. Criminals operate without regard for our laws and our borders. Therefore, data sharing is a crucial part of any organisation’s armoury to stop them. This report is a must-read for all financial institutions concerned about the rising tide of crime.”

Most commentators agree that the very limited way that the financial industry is sharing information today is outdated and must be vastly improved if the UK wants to stop the rising tide of economic crime. A robust data-driven (preferably global) solution is, therefore, seen as critical. The whitepaper, In collaboration with Form3, finds the nation is now at a crossroads where many forces are aligning to open up the opportunity for more effective data sharing both within the public sector, within the private sector, and between each sector.

Tony Craddock, Director General of The Payments Association, noted, “We are very excited to share the results of this report. Every one of us has our payments data shared with agencies in the UK and sometimes elsewhere to comply with anti-money laundering legislation and fraud protection, so it is vitally important that individuals, businesses, and governments all understands what is possible, what doesn’t work and what is necessary to keep everyone involved in the payment landscape secure.”

Data sharing in the UK could be improved to prevent economic crime while taking into account of existing and forthcoming privacy legislation, including:

Key Highlights:

• Collaboration both between regulated entities and between the public and private sectors is key to progress on data sharing to prevent economic crime.
• Confidence in their ability to share data without risk of prosecution is vital for financial institutions to be able to combat economic crime.
• The position of data providers to financial institutions, not just regulated entities, must be covered in both legislation and guidance as many financial institutions want to be able to use the latest technology and data and do not have the technical resources or are too small to do this for themselves.