CFIT publishes plan to introduce Digital Company ID to tackle economic crime

The Centre for Finance, Innovation and Technology (CFIT) has published its blueprint for fighting economic crime through the widespread adoption of Digital Company ID, which recommends developing, launching and testing a prototype.

CFIT found that the introduction of digital company ID has the “potential” to alleviate the burden of fraud on businesses and save the UK billions of pounds each year in lost revenue.

For financial institutions, this could lead to an annual reduction in compliance costs of £1.7 billion, while Digital Company ID will also help mitigate against the annual £6.8 billion cost of fraud to the UK economy, according to CFIT.

The blueprint is the result of the work of CFIT’s industry-wide coalition that brought together a 70-strong group of experts in financial crime, from global financial services companies, academic institutions, technology innovation hubs, government agencies, regulators and policymakers.

The report sets out seven recommendations to bring the work “to fruition”, the first of which is that CFIT, in collaboration with industry, should launch and test a fully functional Digital Company ID prototype, preferably with the support of FCA Innovation services.

It also recommends that the Government consider mandating all relevant organisations across the ecosystem to share data on economic crime, via Digital Company ID and that it appoints a body responsible for overseeing implementation and governance, to “address market coordination failures”.

The report suggests that CFIT establish standards that ensure interoperability, accountability and secure adoption of Digital Company ID, working with industry to do so.

It is also recommended that a taskforce be established to identify, prioritise and develop high-value use cases for Digital Company ID within financial services, while government departments should “lead by example” and adopt Digital Company ID for “critical interactions”, such as procurement, tax filings and confirmation statement submissions.

Finally, the report recommends that policymakers review the regulatory framework for Digital Company ID, to ensure it is “fit for purpose”.

Economic Secretary at HM Treasury, Emma Reynolds MP, said: “The UK’s leading financial services sector is key to driving growth and putting money in people’s pockets through the Plan for Change.

“CFIT’s work in countering fraud demonstrates the UK’s position as an innovator within the global financial ecosystem. I look forward to considering the Coalition’s findings as part of our range of work to grow the sector.”

CFIT chair Charlotte Crosswell

Charlotte Crosswell OBE, chair of CFIT, said: “CFIT has brought together some of the brightest industry minds to work together and find solutions to reduce the fast-rising, multi-billion-pound annual cost of fraud to the economy.

“Fraud stifles economic growth by burdening businesses and banks with unnecessary costs, slowing access to setting up bank accounts and the loan finance needed for businesses to invest and grow.”

Crosswell added: “These challenges must be addressed if we’re to support the Government in its mission to deliver economic growth and safeguard the UK’s reputation as a safe place to do business.

“Access to verified, authenticated and centralised data sharing through Digital Company ID would help dismantle these systemic barriers, close the loopholes exploited by fraudsters, reduce compliance costs for banks and transform the business landscape in the UK.”

Data from the Office for National Statistics showed that, in 2023, more than 1.2 million incidents of fraud were committed in the UK — equivalent to nearly two fraudulent acts every minute.

Phalé McMillan, NatWest Group’s head of financial crime risk management and deputy group MLRO, added: “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.”

Further reading: CFIT secures industry partners to lead next coalition