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The Economic Crime and Corporate Transparency Act 2023 (ECCTA) came into force on 26th October 2023, after the Bill of the same name received royal assent.  

The ECCTA strengthens the UK’s efforts to combat economic crime via a wide-ranging suite of reforms.  These include new and enhanced powers for Companies House to scrutinise information provided by companies and their directors.  In addition, there are new offences for failure to provide information or make false statements, as well as new routes for the Serious Fraud Office and National Crime Agency to attribute corporate liability through the introduction of a failure to prevent fraud offence.

Let’s focus on Companies House…

Companies House Reform

Companies House has undergone the biggest shake up in its 180-year history, turning it from a largely passive recipient of company information to a much more active gatekeeper.  It now has enhanced abilities to verify the identities of company directors, remove fraudulent organisations from the register, and share information with criminal investigation agencies.  

More specifically, the reforms include:

• Identity verification of all new and existing registered company directors, People with Significant Control, and those delivering documents to the Registrar.
• A requirement that those forming or running companies supply additional information in relation to material they file with Companies House.
• The ability for the registrar to and query and/or reject information already on the register identified as potentially fraudulent, suspicious or might otherwise impact on the integrity of the register or wider business environment.
• Proactive sharing of all information held by Companies House about any entity with law enforcement, regulatory bodies, and other public authorities either to assist in carrying out its own functions or to assist a public authority with the exercise of its functions.
• Discretionary powers to remove material from the register, change the address of a company’s registered office, and take action against those persistently failing to provide an appropriate registered office address.

What happens next?

The provisions of the ECCTA will come into force under a phased approach to allow companies, and Companies House itself, time to prepare for implementation.  

However, Companies House has noted that, whilst some of the measures in the ECCTA will need processes to be developed and secondary legislation before they can be brought into force, other measures can, and will, be brought into force sooner.  

In early 2024 we can expect early-implementation measures to come into force including the power to query or reject information filed with Companies House, revisions to the company names regime, and the requirement for companies to provide the registrar with an email address.

What does this mean for FullCircl customers?

We are excited about the ECCTA, and specifically the reform of Companies House, and the impact it will have in terms of greater transparency, accuracy, and reliability of data.  After all, the more reliable the data, the more valuable our tools, applications and business logic become – helping our customers identify & acquire customers, verify and onboard them quickly, and retain and grow relationships for the long-term.

Customer Lifecycle Intelligence is not static data - we deliver a multi-dimensional view that combines advanced data ingestion, validation, data matching, and augmentation with real-time sanction, PEPs, adverse media screening and more.  All neatly delivered via web app or API.  

Whether it’s automated data collection and critical checks, ensuring compliance, confidently targeting the right customers, or growing advocacy through frictionless onboarding and support, FullCircl’s SmartBanker solution is helping the UK’s leading banks and financial service providers to:

• Minimise the time spent gathering management information
• Identify the business customers that fit their organisation's risk appetite
• Enhance the ability to proactively engage with customers.

If you have questions about the potential impact of the Economic Crime and Corporate Transparency Act and how to stay ahead of implementation, or if you would like to experience SmartBanker’s capabilities get in touch with a member of our team today.  

It’s been a tough few years for SMEs. The cost-of-living crisis and threat of recession followed hot on the heels of the Covid pandemic pushing many SMEs into recovery mode, with many more at real threat of going under.

The Covid loan scheme offered some respite and the opportunity to access finance more quickly. But in 2023 with repayment of these loans looming, and a wider backdrop of rising costs, high inflation, rising interest rates and supply chain disruption, the pressure on SMEs has only intensified. No wonder they are declining at a rate of 6.5%.

Access to finance is a major problem for SMEs. In fact, the sector currently has unmet finance needs of approximately $5.2 trillion, 1.5 times the current lending market. Alongside the rising cost of debt, there is a growing concern that bank lending criteria is preventing SMEs from accessing the finance they need. Nearly one in three SMEs recently identified working capital and cash flow management as a reason for requiring external finance, but only 45% of respondents felt confident they would be able to secure that finance from their bank.

If banks fail to respond, the consequences are potentially catastrophic. After all, SMEs account for 99.9% of the business population, and around half the turnover of the UK private sector.

An opportunity as yet unrealised

Unmet needs are opportunities for new value creation. But, has digital transformation in SME banking progressed enough to ensure this sector (and the opportunity it represents) survives and thrives?

Unfortunately, the answer is no.

Lack of insight is a huge stumbling block.

The volume and variability of SME businesses makes it difficult to create banking services that meet diverse needs and deliver personalisation at scale.

A new way forward

A new KYC approach is required, one that is rooted in fast, comprehensive, and real time Customer Lifecycle Intelligence. In our latest whitepaper we investigate what this new approach really looks like in practice.

Download your copy now and learn:

• The market trends impacting SME banking
• What SMEs want from financial service providers
• What the modern SME banking ecosystem looks like
• The path forward

The Russian invasion of Ukraine in February 2022 led to an unprecedented number of new sanctions against individuals, groups, and entities.  But it was not only the scale of the sanctions, issued by multiple regulators, but the speed with which they came into force that created an extremely complex environment for financial institutions (FIs), who have been racing to keep pace ever since.

Similarly, identifying and managing Politically Exposed Persons (PEPs) is increasingly complex due with regulators amplifying the need for vigilance.  Importantly, the FCA is currently undertaking a review to assess how regulated businesses are complying with their legal and regulatory obligations regarding PEPs.

Major national and international events can quickly prompt revisions to PEPs and sanctions lists targeting countries, businesses, groups, and individuals, as well as the level of restrictions imposed on them. In August 2023 the UK government announced a range of new sanctions against Iranian individuals and entities, and following the recent attacks on Israel it’s conceivable that we will see a new raft of sanctions targeting groups such as Hamas and Hizbollah.

How have FI’s responded so far?

It turns out, the response has not been that great actually!  According to new research from SmartSearch only 36% of challenger banks have made changes to compliance procedures to screen for PEPs and sanctions since the start of the conflict in Ukraine. And whilst fairing a little better, 40% incumbent banks still have not taken additional precautions.  

Whilst failure to keep up with PEPs and sanctions changes can lead to inadvertently facilitating money laundering, fraudulent activity, and illegal transactions, it can also run the risk of substantial fines and severe reputational damage.  According to Fenergo, in 2022 alone FIs globally were penalised to the tune of $4.2 billion due to breaches of Anti-Money Laundering (AML) regulations. A 52% increase from 2021 which brings into stark relief the scale of the challenge facing financial institutions right now.

It is crucial for FIs to conduct thorough screening checks and due diligence through the customer lifecycle – from identifying and acquiring new customers, through verification and onboarding, to retaining customers and growing relationships.

But it’s not just the changing PEPs and sanctions lists that are tough to navigate, it is equally difficult to untangle the complex hierarchical structures surrounding them.  Increasingly complex corporate structures and fragmented ownership data obscure a complete view and prevent organisations from effectively assessing risk. Not only does this pose challenges to meeting regulatory requirements, but it also impacts the customer experience.

Time for some good news…

Digital solutions can help simplify the complex PEPs and sanctions landscape and make it easier to navigate.  Here’s how:

• Automated screening - Realtime global coverage to pre-screen for political exposure, sanctions, and adverse media to ensure that your customers are not involved in any illegal or prohibited activities.
• Graph data visualisation – Recognise the connections between directors, shareholders, and group companies up to the Ultimate Beneficial Owner and understand any risks associated with the people you do business with.
• Identify verification – verify identify in real time with automated document verification and facial comparison technology.
• Perpetual KYC- Event-based alert notifications of changes to watchlists, financial and credit information

The even better news…get smarter on PEPs and sanctions

SmartOnboard from FullCircl is the industry’s comprehensive compliance platform, accelerating customer screening while enabling FIs to better manage risk throughout the customer lifecycle.  Features include:

• Customer onboarding checks: Onboard business customers up to 94% faster with automated KYC, AML, and credit checks.  
• Ongoing screening: Screen customers at any time to ensure information reflects current circumstances when reviewing customer products or internal risk appetite.  
• PEPs, sanctions, and adverse media: Get access to PEPs, Sanctions and Adverse Media with categories aligned to the latest FATF recommendations and a 70% reduction in false positives.  
• Ownership and UBOs: Understand company ownership structures and beneficial owners to help improve customer onboarding, reduce risk, and meet regulatory requirements.  
• Credit & Risk: Assess a customer’s creditworthiness and financial health. FullCircl provide credit reports, credit scores, and other critical financial indicators to help you evaluate the customer’s credit worthiness quickly.  
• Monitoring: Event-based alerts notify you of any changes in critical financial information held on the companies in your watchlist.

Book a demo and find out how FullCircl can help you onboard customers faster and manage risks smarter.

Or, why not join FullCircl and our partners at ComplyAdvantage on 2^nd November for our interactive webinar, and get prepared to tackle the PEPs challenge.  Join our expert panel as we discuss:

• Why there isn’t a globally agreed definition for PEPs and the methodologies that can be used to define them.
• How adopting a data-driven approach to deliver a more layered solution for PEP screening empowers risk-based decision-making.
• Best practices to assess PEPs’ family members, known associates, businesses, and their transactional relationships.
• How to investigate relationships and financial interactions to identify broader patterns of sanctions evasion and political corruption.

The cost of regulation for insurance brokers, especially small independent firms, is at all-time high.

According to BIBA, direct regulatory costs for brokers are 40% higher than in 2019.  Overall direct and indirect costs are equal to 8.1% of fees and commissions, a burden twice as high as experienced by counterparts in other countries. Add to this rising inflation, a hard market, the limits insurers are putting on volumes, and the rising costs associated with HR, accounting, marketing, and IT, and it’s no surprise to hear that many brokers are exiting the market and stating disproportionate regulation as a primary reason.

This could be highly damaging for the sector, which is largely made up of smaller firms. Brokers arrange over £74 billion of insurance each year, which is 67% of general insurance business and 81% of all commercial insurance business in the UK. However, the number of independent brokers and agents in the UK has declined by 0.4% per year on average over the last five years.

Of course, regulation plays a vital role in maintaining a healthy insurance ecosystem, but it must be proportionate. Something BIBA pointed out at its annual conference in May when concerns were raised that red tape costs have increased exponentially for brokers in the past three years.  

BIBA urged the FCA to proceed with caution when considering the impact of regulation bearing in mind more than one in four employees in smaller firms are focused entirely on regulatory matters. BIBA CEO Graeme Trudgill reaffirmed this in his manifesto in July 2023, stating that smaller brokers are swamped by regulation and that the cost is prohibitive.  

Tackling the regulation challenge

The first challenge for brokers is simply staying on top of regulation and ever-changing compliance requirements. One look at BIBA’s regulation updates page, and it’s immediately clear just what a challenge this is, especially for smaller brokers.    

The Consumer Duty passed earlier this year sets a higher and clearer standard of protection, requiring brokers to put their customers’ needs first. Whilst this is great for industry confidence, it increases complexity for brokers as well as incurring the additional time and costs associated with fair value assessments. And with the Government’s Future Regulatory Framework rapidly taking shape following royal assent of the Financial Services & Markets Act in June, brokers can expect a raft of new reforms in the coming months and years.  It’s vital they can proactively understand and adhere to regulatory updates to avoid penalties, maintain their licences, and build trust with their clients.   

A data-driven approach means brokers will never be blindsided by significant changes to regulation. Likewise, access to real-time customer information and insights ensures brokers gain a holistic view of each customer's financial situation, group structure etc. and can be alerted to any risk profile changes that could impact their ability to achieve their compliance requirements.

It's also important for brokers to look for opportunities to drive growth to offset the cost of regulation. Acquiring new business and retaining clients are two of the most important aspects of sustainable growth for any insurance broker. By leveraging data-driven insights, brokers can identify new opportunities and build strong, long-term relationships that drive growth and revenue.  

Instead of counting the cost of regulation, brokers can drive growth when times are tough by taking a smarter approach.

The smartest way to tackle the cost of regulation and drive growth

Introducing SmartBroker™. SmartBroker™ is democratising customer intelligence for the independent broking sector by enabling brokers to identify new opportunities and build long-term relationships that drive growth and revenue by leveraging data-driven insights.​

Benefits of Smart Broker:

• Prospect with precision​ - Gain a complete view of the markets that matter to you, segmented by the attributes of your most profitable customers.
• Prepare better underwriting submissions​ - Leverage data to remove knowledge gaps and ensure you produce comprehensive submissions every time.
• Data-driven insights to tailor outreach​ - Real-time news insights will give you the right things to say at the right time and help become a trusted advisor to your clients.
• Increase client retention​ - Don’t get blindsided by significant changes to your client’s business and risk portfolio at renewal. Be alerted to changes, to help mitigate risks sooner.

FullCircl is proud to support many independent brokers, as well 9 of the top 10 UK brokers, 40 of the top 50.  

To find out how SmartBroker™ can support your business, speak with one of our insurance experts to arrange a demo, see pricing and get started.

Onboarding is a crucial stage in every customer journey, and customer due diligence for banks is a vital component of the onboarding process. If due diligence is badly handled and too onerous, leaving potential customers frustrated by delays and complex requests, they may abandon onboarding, which means the bank loses a new revenue stream. And if it’s incomplete or inaccurate, the bank may onboard a customer who is a commercial and reputational liability, with the risk of heavy fines from regulators.  

Due diligence refers to all the essential checks that a bank must perform to confirm the identity and background of a potential or existing customer, and is a regulatory requirement to mitigate risks such as money laundering and financing terrorism. It typically involves collecting and verifying data about financial and business activities, and requires ongoing monitoring to identify changes in a customer’s risk profile.  

Effective due diligence for banks will promote customer lifetime value: it distinguishes good customers from bad ones, ensures compliance and operational efficiency, and creates a strong foundation for profitable and lasting relationships.  

Let’s explore the requirements for effective customer due diligence for banks and the challenges they face today, then show how the right technology can save time and provide the insights banks need to boost customer experience and make the right connections.  

Customer due diligence in practice

Customer due diligence is closely related to know your customer (KYC), as the aim is to create transparency and precision for every business relationship that a bank enters into. It should involve continuous monitoring over the lifetime of a customer so that banks can identify changes or red flags that might signal increased risk or illegal activity. The three main strands are:

• Standard customer due diligence
• ‍Enhanced due diligence
• Ongoing due diligence

Among other things, customer due diligence checks will involve thorough reviews of:

• Identification documents
• Information on business and financial history
• Beneficial ownership structures  
• Relevant public records  

At its core, customer due diligence for banks is necessary to ensure compliance with anti-money laundering regulations, which in turn help to combat the financing of terrorism. So, the twin regulatory objectives are AML and CFT.  

Challenges with customer due diligence for banks

Banks must onboard the right kind of customer and comply with ever-evolving regulations, but the customer due diligence process is often long and drawn out, off-putting for customers, and flawed. Surveys and statistics bear this out. For example, according to Oliver Wyman, it takes between 90 and 120 days to onboard a customer, while Thomson Reuters reported that 80% of corporates found it a poor experience.  

One of the main drawbacks when it comes to customer due diligence for banks, is the reliance on manual processing and outdated practices. Data is often unconnected and residing in silos, or it is fragmentary or no longer current. Lack of integration and poor data make it difficult to achieve a holistic and up-to-date view of customers. And if there are information gaps, then errors and oversights are inevitable. This is particularly the case when banks need to perform ongoing due diligence.  

As data sets grow, banks must process more information at speed. Delays and repetitive processes create a negative impression with customers, and customer due diligence for banks is usually the most data-intensive and time-consuming part of onboarding. When prospective customers find it too demanding, they may take their business to a competitor who can provide accelerated onboarding. Today, the speed of due diligence is a key measure of overall customer experience. However, because of the risk of fraud, banks must also ensure that speed is combined with precision and security.

So, what must banks do to meet these challenges and optimise speed, security, and overall customer experience? The answer is to digitise and automate the due diligence process.      

Boosting profitability with streamlined customer due diligence

The first step is to create a comprehensive digital strategy for onboarding and regulatory reporting and compliance. Piecemeal changes will not solve weaknesses in security or operational deficiencies, especially with the growing risk of financial crime, and any bank that is still using spreadsheets will always be compromised.  

According to Mckinsey, the onboarding experience is often overlooked in corporate banking. This is a mistake because it can have significant financial implications. Apart from the risk of losing a potential customer, a lengthy due diligence process will dent time-to-revenue. Banks must therefore improve their digital infrastructures to capitalise on the growing demand from corporates.  

As Mckinsey says: ‘Participating in this growth opportunity will depend on banks optimising their end-to-end onboarding experience for transaction banking customers.’ McKinsey adds that its own research reveals that half of all banks lack a technology solution for many onboarding processes.  

How FullCircl enhances customer due diligence for banks

FullCircl provides the focus and technology to turn customer due diligence for banks into a revenue generator. Thanks to automated KYC, AML and credit checks, you can strengthen security and onboard customers in a fraction of the time it normally takes. Costly and error-prone manual processing is eliminated, and you maintain a 360-degree view of customers to ensure ongoing compliance.  

See our guide for better customer onboarding and a book a demo to discover all FullCirl’s capabilities for banks.