A Data-Driven Response to Economic Crime in the UK
30 November 2023
Financial Crime in the Data Age
Future historians looking to define our era will have little trouble naming the epoch; we are living in the ‘Data Age’. According to numerous sources, 90 percent of the data created in the world was created in the last two years and it is predicted that the volume of data created will double every two years.
The economic benefits of this ‘Data Age’ are well understood. The UK Data Strategy’s first mission is to unlock the value of data across the UK economy; a value estimated to be around £50bn per annum to the UK economy.
However, while the pathway to realising the value-generating potential of the Data Age is increasingly well-defined, the journey towards realising the full value-saving potential of data – in the context of economic crime prevention – is less so.
The case for accelerating this could not be more urgent - fraud is costing the UK economy upwards of £200 billion per annum and money-laundering, as the lifeblood of a serious organised crime threat, is costing the UK around £40bn.
Unlocking the Power of Data
At Cifas we have long understood the value of data and its potential to prevent significant levels of fraud and the associated financial losses; in 2022 Cifas members reported fraud prevention savings in excess of £1.3bn from our National Fraud Database, alone. While we are proud of this, we know that more can be done to unlock the power of data in the response to economic crime; and that there has never been a better time to do so.
Firstly, from a technological perspective, while the data landscape across the UK’s anti-economic crime community is undeniably fragmented, considerable strides have been made in data-networking and analytical capabilities, which offer a new-found ability to bridge this disparate landscape.
Secondly, from a legislative perspective, we are seeing major developments which provide more clarity and confidence to share data for the purposes of tackling economic crime. The recent enactment of the Economic Crime and Corporate Transparency Act (ECCTA) provides – for the first time – more legal clarity for banks and the wider regulated sector to share financial crime information, including in relation to money laundering. Alongside this, the Data Protection and Digital Information (DPDI) Bill, currently making its way through Parliament will, once passed into law, provide further legal clarity around the sharing of data for the purposes of preventing or detecting crime, including economic crime.
Finally, the UK government’s Economic Crime Plan 2, launched in March 2023, rightly recognises the value of data in the fight against economic crime, and commits to creating a public-private Economic Crime Data Strategy to “enhance the exploitation of available data across the ecosystem to better prevent, detect, and pursue economic crime”.
Although this aspect of the Plan was somewhat under-played, its significance should not be under-estimated; if correctly framed the Data Strategy has the potential to revolutionise the response to economic crime in the UK and provide a global blueprint for a data-driven response to the problem.
Creating a Data Eco-System
To do so the data strategy needs to move us from siloed information-sharing responses, to a dynamic, networked, collaborative data analytics eco-system; and one that is realistic, cost-effective and appropriate for the UK context.
Building the pathway to this vision will not be easy and requires a multi-disciplinary approach drawing in expertise from across financial crime, data science, digital trust and data privacy fields. Only by drawing in a range of expertise will we be able to build a data eco-system with the correct system architecture, infrastructure and governance for the future. While difficult, some foundational principles are emerging upon which the future system can be built.
In terms of system architecture, in the UK we are fortunate to be building from strong foundations, with many examples of mature data consortia and information-sharing platforms, including our own. In short, rather than starting from scratch, we have a strong foundation from which to build.
What we must do next is better connect and network the landscape; the recent Which? report on data-sharing in fraud prevention sets out useful examples of different ways in which this might work in the UK context by using either data pooling or federated data systems; or, it could be added, a fusion of the two.
Turning this systems architecture theory into technical practice will, of course, not be easy. However, given the considerable strides forward in technical underpinning for data federation it is not impossible; a 2019 white paper on federated data models by the World Economic Forum offers high-level examples of how this has been achieved in other fields, in particular as relates to health care data.
Baking in trust from the outset
While the architectural and technological aspects of a future data eco-system are imperative, there is a more elusive ingredient on which the future system must be predicated – trust. As noted by the fore-mentioned World Economic Forum paper, “the technology is not the most difficult aspect of setting up such efforts; the governance of such systems and engendering a level of trust between nodes will be the more difficult challenge”.
Systems like ours rely on trust and confidence in the work we do and Cifas is proud to operate to the highest legal, technical and operational standards, including clarity and transparency for consumers. As the economic crime data landscape matures, consolidates and networks, it is clear that we need to maintain public trust and confidence in the system under the new data strategy landscape.
This requires strong system governance to ensure that all actors are working to the same high standards of security, transparency and data integrity. This is an issue requiring extensive input from the data ethics and data trust communities; this work may wish to consider the concept being mooted in the forementioned Which? paper relating to a ‘trust framework’ for non-governmental economic crime data hubs.
Building towards the future, today
In sum, a unique confluence of events means that the conditions for building a data-driven response to economic crime in the UK have arrived. Capitalising on these circumstances, however, will take considerable time, expertise and investment. Given the substantial human and financial cost to the UK from economic crime, it is imperative that we make this investment and are bold in our ambition.
At Cifas we are committed to contributing to a new vision for tackling economic crime in the data age, working with others in the community to ensure that we unlock the potential of data to protect individuals, businesses and the public purse from the threat of economic crime.
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