New UK legislation facilitates enhanced information sharing among anti-money laundering (AML) firms, reshaping compliance landscapes.
The Overview
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduces critical reforms aimed at bolstering the UK’s defenses against economic crime. Set to take effect on January 15, 2024, the Act permits AML regulated firms, as defined in the Proceeds of Crime Act 2002, to share customer information freely. This legislative shift addresses previous obstacles like confidentiality concerns that hindered effective collaboration in fighting economic crimes such as money laundering and fraud.
Key Provisions of the ECCTA
Sections 188 and 189 of the ECCTA empower firms to share information directly or through third-party intermediaries. This sharing can involve current, past, or prospective customers, provided it supports actions such as risk assessments or due diligence. Protections against breaches of confidentiality and civil liability are built into the framework, allowing for more robust preventative measures against crime.
Conditions for Information Sharing
Under the new guidelines, there are specific conditions to meet for sharing information:
- Request Condition: The requesting firm must believe that the responding firm possesses relevant information that could aid in preventing economic crimes.
- Warning Condition: The sharing firm must have taken, or be prepared to take, actions such as enhanced checks to safeguard against economic crimes.
Moreover, firms are required to maintain comprehensive audit trails and ensure that shared information only goes to legitimate AML regulated entities.
Compliance Impact
Firms should prepare for these changes by establishing internal governance frameworks that include:
- Designating single points of contact for verification.
- Developing secure platforms that comply with UK GDPR.
- Conducting periodic risk assessments covering data protection and reputational risks.
As the landscape shifts, firms must also ensure that they remain aligned with risk-based approaches to sharing information without jeopardizing the confidentiality of customers or ongoing investigations.
With the ECCTA’s implementation on the horizon, it is crucial for corporate attorneys, CPAs, and compliance officers to stay informed and adapt their strategies accordingly to navigate these new obligations effectively.