Criminal Finances Act 2017

In this article, we examine the key provisions of the Criminal Finances Act – which received royal assent on 27 April 2017 – what this means for regulated sectors and how technology can help drive adherence to the new requirements under the Act. So, what are those changes, and what does this mean for existing methods of Know Your Customer (KYC) and beneficial ownership investigations?

The Criminal Finances Act came into being following the Panama Papers, which shone a spotlight onto the world of offshore funds and politicians’ use of these sometimes less-than-transparent vehicles.  It also provides amendments and updates to the Proceeds of Crime Act 2002 and the Terrorism Act 2000, and expands the powers of law enforcement around asset recovery and money laundering cases

The first key provision under the new Act centres on the development of Unexplained Wealth Orders, or UWOs.  These orders allow the High Court, via an enforcement agency, such as the National Crime Agency (NCA) or the Financial Conduct Authority (FCA) to request information about the nature of an individual’s property and how they acquired it. There are two groups who can be the subjects of UWOs: Politically Exposed Persons (PEPs) and those suspected of being involved in serious crime.  For regulated industries, this means that gaining additional context and information about the source of wealth and true corporate exposure of a PEP and his/her family members becomes an increasingly important step in the due diligence process.

The second provision relevant to regulated entities is the criminalisation of failing to prevent tax evasion by individuals and organisations. This part of the Act takes its lead from the UK Bribery Act of 2010, which made it a criminal offence for firms not to have suitable provisions in place to prevent bribery from occurring both internally and with its partners. The inclusion of this provision indicates an increasing focus on tax evasion, and as such applies more pressure on internal teams within regulated industries to identify possible instances of it, and respond appropriately to any investigations.

In each of these scenarios, Blackdot’s investigation platform, Videris®, is perfectly placed to assist regulated entities in meeting the requirements of the new Act. Not only is all the released data from the Panama Papers preloaded into the tool, it also contains a variety of other features that are optimised for detailed investigation. For instance, investigating the source of wealth of a PEP, and doing the necessary Enhanced Due Diligence around these higher risk entities becomes simpler when corporate records are at your fingertips through our integration with Bureau van Dijk. Negative news media in multiple languages is translated and available at the click of a button through our assimilation with Factiva and translation capabilities.

Further, with the additional law enforcement and regulatory focus on tax evasion, understanding corporate networks associated with potential clients – whether individuals or commercial entities – is vital in making sure firms understand the full nature of the risk and exposure they might take on in accepting such entities as clients.  Videris®’ ability to intelligently match corporate entities detailed in official records with those mentioned in internal reporting via our integration with document management systems, such as Relativity and Alfresco, makes the process of identifying connections simpler and failsafe.

Blackdot Solutions is a ground-breaking UK-based technology company. We have created a unique investigations platform, which aims to bring intelligence agency-grade investigations technology to a wider range of sectors.  Information from the Internet is freely available, ethical and legitimate. With Videris®, it can become your biggest single database of valuable intelligence.

If you would like to explore licencing options, please get in touch with our Financial Services and Regulated Sector Client Engagement team using the contact form below.