Bribery, fraud and anti-money laundering | UK Regulatory Outlook November 2023

Criminal Justice Bill introduced in Commons

On 14 November 2023, the Criminal Justice Bill was introduced in the House of Commons.

Among other things, the bill proposes to replace sections 196 to 198 of the Economic Crime and Corporate Transparency Act which will expand the "identification doctrine" so that companies can be held criminally liable for criminal acts committed by senior managers of the company acting within the "actual or apparent authority granted by the organisation". The government committed to reform of the identification doctrine by expanding its scope to apply to all criminal offences in the Economic Crime Plan 2 and the Fraud Strategy.

The relevant provisions in the Economic Crime and Corporate Transparency Act, which are due to come into force on 26 December 2023, confines the offence to specified economic crimes. The second reading of the bill took place on 28 November 2023. See the government factsheet on the bill.

Economic Crime and Corporate Transparency Act commencement regulations

As previously reported, the Economic Crime and Corporate Transparency Act (ECCTA) received Royal Assent on 26 October 2023, introducing among other things, important changes to the UK's company register and a new corporate criminal offence of failure to prevent fraud.

On 16 November 2023, the Economic Crime and Corporate Transparency Act 2023 (Commencement No. 1) Regulations 2023 were published. These will bring into force on 15 January 2024 a number of provisions within the ECCTA, including information sharing measures for businesses within the anti-money laundering regulated sector for the purposes of preventing, investigating and detecting economic crime.

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FCA publishes multi-firm review of anti-fraud controls and complaint handling in firms

The Financial Conduct Authority (FCA) published a multi-firm review examining the systems and controls payment service providers have in place to mitigate the risks of authorised push payment (APP) fraud and prevent fraud.

The review carried out a high-level evaluation of 12 current account providers, challenger banks and payment firms to assess their current approach to fraud risk management. In particular, the FCA found instances where firms were unable to provide adequate support offered to customers who were victims of fraud.

Firms are expected to use the FCA's findings to improve their fraud detection and management processes and align themselves with the FCA's expectations of firms. The FCA will continue to monitor and work with firms in strengthening anti-fraud systems to prevent losses.

The review should be read in conjunction with the FCA's publication on the proceeds of fraud. See the full press release. For further information, see our Insight.

PSR publishes APP scams performance report

The Payment Systems Regulator published its first APP fraud report, covering the performance of the largest 14 banking groups from January 2022 to December 2022 on tackling APP fraud and their treatment of victims of fraud.

The report, which focuses on Faster Payments as it was used for 98% of APP fraud payments, provides greater transparency on how well firms handle APP fraud prior to the PSR's new reimbursement requirement that will come into force in 2024.

The PSR will collect data from payment firms for 2023 as well with the aim of publishing a report in the following year.

See the full press release.

FATF report: Illicit Financial Flows from Cyber-Enabled Fraud

The Financial Action Task Force (FATF) published a report which identifies the top three areas which jurisdictions should focus on to help mitigate the threat of cyber-enabled fraud and related money laundering:

• enhancing domestic coordination across public and private sectors through greater information sharing;
• supporting international collaboration between various sectors in investigating and recovering cyber-enabled fraud proceeds; and
• strengthening the detection and prevention of cyber-enabled fraud by promoting awareness and improving crime reporting mechanisms.

The report also includes a list of recommended risk indicators and useful anti-fraud requirements and controls that public and private sector entities should implement to detect and prevent instances of cyber-enabled fraud and money laundering.

See the full press release.