The Centre for Finance, Innovation and Technology (CFIT) has unveiled plans for a digital company ID that it says could help slash fraud and save British businesses billions of pounds every year.
In 2023, over 1.2 million incidents of fraud were committed in the UK — equivalent to nearly two fraudulent acts every minute, according to ONS data. And, with AI and tools such as deepfakes becoming more sophisticated and prevalent, fraud is set to rise.
CFIT has brought together an industry-wide coalition of leading experts in financial crime from global financial services companies, academic institutions, technology innovation hubs, government agencies, regulators and policymakers to investigate how a Digital Company ID could help tackle the problem.
The centre predicts that the introduction of this ID will significantly reduce regulatory and administrative burdens for businesses, particularly SMEs. For financial institutions, this could also lead to an annual reduction in compliance costs of £1.7 billion.
Digital Company ID will also help mitigate against the annual £6.8 billion cost of fraud to the UK economy - both directly, through unified and secure data sharing that will disrupt fraud networks and close exploitable gaps, and indirectly, by enabling financial institutions to redeploy compliance savings into strengthening anti-fraud efforts.
CFIT is now urging Government, regulators and the wider financial sector to collaborate and put in place the necessary regulatory frameworks and initiatives. It has seven recommendations:
- Develop a Prototype for Digital Company ID: CFIT, in collaboration with industry, should launch and test a fully functional Digital Company ID prototype, preferably with the support of FCA Innovation services.
- Enable Reciprocal and Secure Data Sharing: The Government should consider mandating all relevant organisations across the ecosystem to share data on economic crime, via Digital Company ID.
- Appoint a Lead Authority: To address market coordination failures, the Government should consider appointing a responsible body to oversee implementation and governance.
- Promote Standards for Interoperability: CFIT should work with industry to establish standards that ensure interoperability, accountability and secure adoption of Digital Company ID.
- Create a Multi-Stakeholder Taskforce: Establish a taskforce to identify, prioritise and develop high-value use cases for Digital Company ID within financial services.
- Review the Regulatory Framework: Policymakers, working closely with industry, must review the regulatory framework for Digital Company ID ensuring it is fit for purpose.
- Drive Market Confidence Through Government Adoption: Government departments should lead by example, adopting Digital Company ID for critical interactions such as procurement, tax filings and confirmation statement submissions.
Phalé McMillan, head, financial crime risk management and deputy group MRLO, NatWest, says: "Financial crime is one of the most pressing crimes in the UK, which is why cross-industry collaboration is vital to protect consumers, businesses and the overall economy. The proposed Digital Company ID highlights the role technology plays in protecting the financial system and customers, whilst supporting UK economic growth."