Part 2: Top 5 corporate crime compliance trends for the year ahead
As we commence a new year in the midst of unprecedented global challenges, here is our take on the key financial crime risk and compliance trends you need to be aware of in 2021.
Sam Tate, Head of our White Collar Crime Team, and Kate Langley share their thoughts on five likely developments to the corporate crime compliance landscape.
1. UK legislation on financial crime will become more complex: The full application of the Sanctions and Anti-Money Laundering Act 2018 from 1 January 2021 paves the way for further UK specific rules post-Brexit. In particular, the creation of a broader corporate criminal offence of "failure to prevent economic crime" remains on the legislative agenda, with the Law Commission due to publish an Options Paper in late 2021 (as previously discussed by RPC here).
2. Investment in Technology will be key to sustaining robust controls: As employees continue to work remotely, organisations will need to leverage technological developments to bolster their financial crime controls. From remote KYC/CDD activities, to onboarding new employees, training and monitoring the workforce, the pandemic has provided a timely opportunity for organisations to review their risk assessments and consider implementing further controls to ensure a robust response to new and emerging threats.
3. Cryptocurrency industry under the regulatory spotlight: In early 2020 the scope of crypto regulation was broadened to incorporate peer-to-peer exchanges and custodian wallet providers, pursuant to the EU's 5th Money Laundering Directive. The latest UK National Risk Assessment on Money Laundering and Terrorist Financing flags the expansion of the "cryptoasset ecosystem" as leading to an increased risk of money laundering. Existing cryptoasset businesses were required to be registered by 10 January 2021 and therefore the FCA is likely to commence enquiries on those failing to meet this deadline.
4. The net around Modern Slavery will be expanded: The risk of individual exploitation has been exacerbated during the pandemic, with decreasing corporate visibility over supply chains. In-scope organisations are obligated to publish their modern slavery statements annually, revisiting relevant controls in place. The Home Office is likely to continue to follow up with businesses in relation to outstanding and out of date statements.
5. Reporting obligations will continue to increase: In Q1 2021, the FCA is due to publish a policy statement on extending annual financial crime reporting obligations. More firms will be in scope if revenue thresholds are removed and/or wider application placed upon those conducting higher risk regulated activities. Even for the non-regulated sector, timely and accurate Management Information on financial crime risk should remain a priority for organisations, along with an established self-reporting roadmap (in tandem with legal advice) should potential breaches arise.
For more information, or to discuss any of these takeaways further, please do not hesitate to contact the us or visit our corporate crime page to find out how our team can help.
For Part 1, on the top 5 corporate crime enforcement trends you need to be aware of, click here.