Lots to look forward to

A huge programme of legislation is proposed for those operating in the financial sector. The limited detail we have so far suggests the changes will be very significant.

In the Queens' speech on Tuesday, a new Economic Crime and Corporate Transparency Bill was proposed. The Bill will aim to "further strengthen powers to tackle illicit finance, reduce economic crime and help businesses grow".

The Government indicates the main elements of the Bill will include:

• Creating powers to more quickly and easily seize and recover crypto assets, which are the principal medium used for ransomware. The creation of a civil forfeiture power will mitigate the risk posed by those who cannot be criminally prosecuted but use their funds to further criminality.
• Enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.
• Broadening the Registrar of Companies’ powers so that they become a more active gatekeeper over company creation and custodian of more reliable data, and introducing identity verification for people who manage, own and control companies.
• Providing Companies House with more effective investigation and enforcement powers.

Given the number of bills announced in the speech, what the regulated community will want to see is the political will to prioritise corporate crime legislation - which is not always there. We still await the implementation of the much-publicised amendments to Modern Slavery legislation (which will give the state powers to punish companies for non-compliance), legislation revisiting how corporate criminal liability is incurred, and the proposed criminal offence of 'failure to prevent economic crime' which would broaden the current criminal law beyond bribery and tax evasion facilitation. Financial crime prevention will not be well-served by these proposals joining the scrap heap.

The speech also referenced a new Financial Services and Markets Bill to strengthen the UK financial services industry. The Government explains that the main elements of the Bill include:

• Revoking retained EU law on financial services and replacing it with an approach to regulation that is designed for the UK.
• Updating the objectives of the financial services regulators to ensure a greater focus on growth and international competitiveness.
• Reforming the rules that regulate the UK’s capital markets to promote investment.
• Introducing additional protections for those investing or using financial products, to make it safer and support the victims of scams.

We await the detailed proposals but this promises radical reform diverging away from existing EU regulation such as elements of MiFID II.

The United Kingdom’s data protection regime will also be reformed by a new Data Reform Bill. The Government explains that the main elements of the Bill are:

• Ensuring that UK citizens’ personal data is protected to a gold standard while enabling public bodies to share data to improve the delivery of services.
• Using data and reforming regulations to improve the everyday lives of people in the UK, for example, by enabling data to be shared more efficiently between public bodies, so that delivery of services can be improved for people.
• Designing a more flexible, outcomes-focused approach to data protection that helps create a culture of data protection, rather than “tick box” exercises.

The Government also commented that the UK General Data Protection Regulation and Data Protection Act 2018 are highly complex and prescriptive pieces of legislation, "encouraging excessive paperwork, and creates burdens on businesses with little benefit to citizens." Because the UK has left the EU, there is now have the opportunity to reform the data protection framework "to reduce burdens on businesses as well as provide clarity to researchers on how best to use personal data."

We think many would agree with these sentiments and would welcome reform in this area.

Authors: David Capps, Ruby Hamid