The Centre for Finance, Innovation and Technology (CFIT) has published its blueprint for fighting economic crime through the introduction of Digital Company ID, which has the potential to revolutionise business in the UK by improving efficiency, security and trust, while saving billions of pounds every year in lost revenue and alleviating the burden of fraud on businesses.
It has demonstrated that the solution to countering economic crime lies in the widespread adoption of Digital Company ID, that will drive economic growth, by generating significant improvements in productivity and countering the efforts of fraudsters. These findings are substantiated by quantitative analysis of bank onboarding and KYB processes, alongside extensive industry consultation and research. The data projects that Digital Company ID will significantly reduce regulatory and administrative burdens for businesses, particularly SMEs. For financial institutions, this could also lead to an annual reduction in compliance costs of £1.7 billion.
Digital Company ID will also help mitigate against the annual £6.8 billion cost of fraud to the UK economy – both directly, through unified and secure data sharing that will disrupt fraud networks and close exploitable gaps, and indirectly, by enabling financial institutions to redeploy compliance savings into strengthening anti-fraud efforts.
In 2023, over 1.2 million incidents of fraud were committed in the UK – equivalent to nearly two fraudulent acts every minute, according to ONS data – and financial fraud is growing every year, with Artificial Intelligence (AI) and tools such as deepfakes threatening to make fraud even more sophisticated and scalable.
The report results from the work of CFIT’s industry-wide coalition that brought together a 70-strong unique group of leading experts in financial crime from global financial services companies, academic institutions, technology innovation hubs, government agencies, regulators and policymakers.
To unlock the full potential of Digital Company ID, the Coalition is urging government, regulators and the wider financial sector to collaborate and put in place the necessary regulatory frameworks and initiatives. The report contains seven recommendations that will bring this work to fruition:
1.Develop a prototype for Digital Company ID: CFIT, in collaboration with industry, should launch and test a fully functional Digital Company ID prototype, preferably with the support of FCA Innovation services
2.Enable reciprocal and secure data sharing: The government should consider mandating all relevant organisations across the ecosystem to share data on economic crime, via Digital Company ID
3. Appoint a lead authority: To address market coordination failures, the government should consider appointing a responsible body to oversee implementation and governance
4. Promote standards for interoperability: CFIT should work with industry to establish standards that ensure interoperability, accountability and secure adoption of Digital Company ID
5. Create a multi-stakeholder taskforce: Establish a taskforce to identify, prioritise and develop high-value use cases for Digital Company ID within financial services
6. Review the regulatory framework: Policymakers, working closely with industry, must review the regulatory framework for Digital Company ID ensuring it is fit for purpose
7. Drive market confidence through government adoption: Government departments should lead by example, adopting Digital Company ID for critical interactions such as procurement, tax filings and confirmation statement submissions.
