Banks Hesitant to Embrace Information Sharing Despite New UK and EU Laws
New legislation in the United Kingdom and the European Union is attempting to dismantle the barriers that prevent financial institutions from sharing data, yet a culture of silence continues to hinder the fight against global financial crime. Despite the implementation of laws designed to protect banks from liability when exchanging information, recent industry data indicates that nearly half of financial institutions remain reluctant to collaborate with their peers, fearing competitive disadvantages and legal risks.
Background and Context
Financial crime, encompassing money laundering, fraud, and terrorist financing, costs the global economy trillions of pounds annually. While competition between banks typically drives innovation and better pricing for consumers, this competitive instinct often proves detrimental when it comes to security. Criminals frequently exploit the silos between institutions to move illicit funds undetected. Regulators argue that breaking down these walls through information sharing is essential to tracing the flow of dirty money and identifying complex fraud networks.
Key Figures and Entities
The response to these regulatory shifts has been mixed. According to the Financial Crime Insights: Europe report, only 50% of respondents in the UK and 51% in the EU expressed a greater likelihood to share information following recent legislative updates.
The primary obstacle appears to be a deep-seated fear of competition. Financial institutions worry that sharing data might expose their weaknesses or customer bases to rivals. This hesitation persists despite guidance from the UK Home Office, which has emphasised that technology platforms and consortium data can be leveraged safely to combat crime without compromising commercial interests.
Legal and Financial Mechanisms
In the UK, the Economic Crime and Corporate Transparency Act (ECCTA), which came into force in early 2024, introduced a critical mechanism: it disapplied civil liability for private-to-private information sharing. This legal shield was intended to provide banks with the confidence to exchange intelligence on scams, sanctions evasion, and money laundering without fear of being sued by other businesses.
Similarly, across the channel, Article 75 of Regulation (EU) 2024/1624 (the Anti-Money Laundering Regulation) empowers financial institutions to form cross-border partnerships. This framework allows for collaboration not just between banks, but also with public sector bodies, such as Financial Intelligence Units (FIUs) and other competent authorities, creating a more unified front against illicit finance.
International Implications and Policy Response
The reluctance of institutions to fully embrace these mechanisms highlights a gap between legislative intent and corporate culture. While the laws provide the ability to share, they have not fully erased the perceived risk of doing so. Banks have cited concerns regarding a lack of clear regulatory guidance, privacy risks, and resource constraints as reasons for holding back.
Looking ahead, the UK Government’s Fraud Strategy signals that working in isolation is no longer a credible option. The strategy calls for coordinated intelligence sharing and innovation to be embedded into daily operations. For these new frameworks to succeed, analysts suggest that regulators will need to provide further education and clarity, proving to the sector that the collective security of the financial system ultimately outweighs competitive advantages.
Sources
This report draws on data from the Financial Crime Insights: Europe survey, the UK Economic Crime and Corporate Transparency Act (ECCTA), EU Regulation (EU) 2024/1624, and official guidance from the UK Home Office.
