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Economic crime refers to illegal acts committed by an individual or a group of individuals to obtain a financial or professional advantage. These crimes can take various forms, including fraud, money laundering, bribery and corruption, insider trading, and cybercrime.

51% of organisations surveyed by PwC say they experienced fraud in the past few years, the highest level in 20 years of their research.

Mitigating economic crime within financial businesses is crucial due to their role in the global economy. Not to mention the potential for financial loss, reputational damage, and legal penalties.

Why Businesses Need to Prove They Don't Participate in Economic Crime

Businesses need to demonstrate that they do not participate in economic crimes for several reasons:

  • Legal Compliance: Many jurisdictions have stringent laws and regulations that require businesses to implement measures to prevent economic crimes. Non-compliance can result in severe legal penalties.
  • Reputation and Trust: Demonstrating a commitment to ethical practices helps build trust with customers, investors, and partners. It also protects the company's reputation, which is crucial for business success.
  • Risk Management: Identifying and mitigating the risks of economic crimes is essential for safeguarding assets and your business’s financial health. It also protects senior directors who could be personally liable for any instances of non-compliance.
  • Market Access: Some markets and business sectors require companies to prove compliance with anti-economic crime measures as a condition for access or participation.

Economic Crime Laws and Regulations in the UK

In the UK, there are several pieces of legislation that businesses need to abide by to prevent and combat economic crimes. Some examples include:

  • The Economic Crime and Corporate Transparency Act: This Act introduces measures to increase the accountability of business entities, strengthen the rules around company formations, and enhance the powers of law enforcement agencies to tackle money laundering, fraud, and other economic crimes.
  • UK Bribery Act (2010): This Act addresses bribery and corruption, making it illegal to offer, promise, give, request, agree, receive, or accept bribes. It also requires firms to have adequate procedures in place to prevent bribery.
  • UK Proceeds of Crime Act (2002): This act is designed to prevent money laundering and requires businesses to have appropriate anti-money laundering (AML) procedures.
  • The Sanctions and Anti-Money Laundering Act 2018: This Act allows the UK to impose sanctions and anti-money laundering measures post-Brexit. It includes provisions for the national security and prevention of money laundering and terrorist financing.

These regulations collectively create a robust framework for combating economic crime and ensuring financial businesses operate with integrity, transparency, and in the best interests of consumers.

Compliance with these regulations is not just about legal adherence; it's fundamental to maintaining the trust and security that underpin the UK's financial system.

How to Mitigate the risk of economic crime

Ensure compliance with regulations by undertaking diligent vendor and contract management. Your processes should involve:

  • Due Diligence: Conduct thorough due diligence on vendors and partners to ensure they do not engage in or support economic crimes.
  • Contractual Provisions: Include clauses that require compliance with relevant anti-economic crime laws and the right to audit the vendor's practices.
  • Ongoing Monitoring: Continuously monitor your vendor relationships and transactions for any signs of non-compliance or suspicious activities.
  • Training and Awareness: Ensure that employees involved in vendor and contract management are aware of the risks of economic crimes and understand the laws and regulations relevant to their operations.
  • Reporting Mechanisms: Implement mechanisms for reporting suspicious activities internally and, if necessary, to relevant authorities.

Dedicated technology such as a Vendor and Contract Lifecycle Management (VCLM) platform offers a comprehensive solution for businesses aiming to navigate the complex landscape of economic crime.

MarketIQ keeps teams ahead of potential economic crime

Gatekeeper's VCLM platform, through our Market IQ Suite, facilitates a more dynamic approach to economic crime risk management.

It enables financial businesses to conduct thorough due diligence by offering real-time data and analytics on vendors, including their financial health and compliance status.

If you’re looking to improve your vendor and contract processes while protecting your business from economic crime, get in touch to see how Gatekeeper can help.

Shannon Smith
Shannon Smith

Shannon Smith bridges the gap between expert knowledge and practical VCLM application. Through her extensive writing, and years within the industry, she has become a trusted resource for Procurement and Legal professionals seeking to navigate the ever-changing landscape of vendor management, contract management and third-party risk management.


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