Marking the start of the parliamentary year, King Charles delivered the newly instated Labour government’s first King’s Speech to both Houses of Parliament last week. In a speech written by the sitting government, the King outlined the draft laws which Sir Keir Starmer’s Labour Party will seek to introduce in the coming months.
The King’s Speech is the once-a-year opportunity for a government to clearly set out their legislative agenda, and this year’s emphasised Labour’s commitment to delivering on public health, energy transition, economic growth and crime prevention.
Among 40 Bills, the King outlined proposed measures to enhance pensions, bolster data protection while promoting data usage, implement regulations to safeguard UK businesses and supply chains from cybercrime, allocate more resources for skills development and apprenticeships, and introduce changes to workers’ rights.
While widespread in its reach, the King’s Speech and accompanying briefing notes referenced a number of initiatives that could stand to directly impact AML compliance and the fight against financial crime.
Read on for the full rundown of what the 2024 King’s Speech might mean for compliance in your business.
The Digital Information and Smart Data Bill
The first standout Bill expected to have an impact on AML compliance is the Digital Information and Smart Data Bill. As outlined in the briefing notes, the Government “wants to ensure we harness the power of data for economic growth, to support a modern digital government, and to improve people’s lives.”
The Bill reforms data sharing standards to provide customers with “innovative services to improve decision making and engagement in a market” to improve access to the right financial products and services, while helping financial institutions to better detect and prevent financial crime by allowing the secure sharing of data with authorised entities.
The ICO (Information Commissioner’s Office) will also receive new, stronger powers to enforce data protection laws, which could result in more stringent oversight of AML compliance measures.
The Bill also leans heavily on digital verification services which help “people and businesses to make the most of identity-checking technologies with confidence and peace of mind.”
Aiming to save people time and money when verifying their identities online, the Bill seeks to establish secure and trusted digital identity products and services, easing processes like customer onboarding, pre-employment checks and age verification. In turn, this would enhance the reliability and security of identity verification processes, reducing fraud risks.
Ultimately, the Bill aims to modernise and strengthen data usage, security, and regulatory structures across the board. In turn, we can expect the knock-on impact of the Digital Information and Smart Data Bill to demand the improvement of AML compliance processes in regulated firms and, where possible, the integration of digital ID&V solutions.
Draft Audit Reform and Corporate Governance Bill
Under this draft Bill, the Government plans to replace the Financial Reporting Council with a new, enhanced regulator called the Audit, Reporting and Governance Authority. At present, the Financial Reporting Council promotes transparency and integrity in business, as the regulator of auditors, accountants and actuaries.
The proposed new Authority would uphold standards, ensure independent scrutiny of companies’ accounts, and hold company directors accountable if they fail in their financial reporting duties.
With the new body would also come new powers to investigate and sanction company directors for serious failures in relation to financial reporting and auditing failings. As a result, company directors will face stricter penalties and even sanctions for failing in their financial reporting duties.
For AML compliance teams, this Bill will necessitate more thorough background checks and ongoing monitoring of directors’ compliance with financial reporting standards to ensure their firm is not associated with any fraudulent or dodgy accounting practices.
While not law yet, this year’s speech outlined the draft laws which Labour plan to introduce in the coming months. With a sizeable agenda and lofty plans for the newly elected government, this year’s speech had an overarching theme of economic growth and stability, and we will see how these newly announced initiatives will unfold throughout the coming months.
