The course of global events over the past years, including Russia’s invasion of Ukraine and an impending recession, has altered existing criminal trends. Combined with technological advances in the global payment landscape, it has paved the way for more sophisticated fraud and scams. 

The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

Last year UK Finance’s 2022 half-year fraud report highlighted that in the first six months of 2022 criminals stole £609.8 million in the UK alone, through either unauthorised or authorised fraud. Expanded regionally or even globally, these numbers run comfortably into the billions.

The industry’s response so far has been to observe financial data using traditional systems, often in isolation from other financial institutions. In the lack of legal gateways for information sharing, this has resulted in a siloed view of relevant threats, limiting the financial institutions’ ability to make better-informed decisions and recover funds.

Meanwhile, European legislative and regulatory developments are underway. These will provide clear direction in information sharing with respect to confidentiality and data protection laws. In particular, the upcoming AMLR/AMLD6 regulatory package will include provisions to enable information sharing across 27 member states as early as next year.

By working collectively and collaboratively financial institutions can tackle financial crime risk in a systematic way, limiting their exposure to operational losses. But it is not only that.

Information sharing is at the forefront of change

Criminals have long understood the importance of networks. Free from legal and bureaucratic constraints, criminal networks operate across multiple jurisdictions, harnessing the collective intelligence to conceal their activities and avoid detection.

Historically, financial institutions were less agile in responding to new threats, but there are signs that change is on the horizon. And it’s already happening in the UK, Sweden and the Baltics, which benefit from a specific legal basis to enable information sharing for AML purposes. In Estonia, Salv Bridge (that started as a country-wide project and has now grown into a functional cross-border tool) has prevented millions of customers’ money from reaching criminal-controlled accounts.

Information sharing offers a real-time understanding of financial behaviour, allowing for a more elaborate and consistent response across the industry. It activates the collective crime-fighting genes and reveals vast pools of knowledge that have been inaccessible for decades. In that way, it’s not a ‘replacement’, it's a continuous enhancement and reinforcement of the best compliance practices.

The best thing about collaborative crime-fighting? Everyone can play their part.

Turning collaborative crime into collaborative crime-fighting

The UK has historically led the world on collaborative initiatives, as highlighted in the reports by the Future of Financial Intelligence Sharing (FFIS) programme. It is also worth to highlight the FATF’s continuous efforts to advance data protection, technology and private sector information sharing. Many other notable developments are coming to pass.

Lessons in private-private financial information sharing by the FFIS offer a great overview of what information sharing can be capable of. As outlined in the paper, a greater volume of inter-connected data enables more accurate decisions, revealing previously unknown connections to high-risk accounts. By focusing investigative resources on specific cases, members reduce the need and cost to rediscover the same financial crime risk.

Messaging communication provides the basis for in-depth information sharing and collaboration, which proves valuable in more complex, multi-institutional investigations. Over the past year, we at Salv Bridge grew from seven collaborative investigations to more than a thousand a month, assisting investigators across three different use cases: AML, fraud, and sanctions. 

We live in a world that is full of data, but devoid of information and statistics. Collaborative crime-fighting connects the data points across multiple institutions and distils financial data into powerful insights. It’s only a matter of time before it comes to your doorstep.

The legal landscape is changing, and changing fast, creating ideal conditions for information sharing. And those who can adapt to the scale and pace of the change will be those who stay ahead.