Digital finance companies in the UK now face increased legal scrutiny under new fraud regulations.
The UK government has introduced a new law aimed at increasing regulatory scrutiny for FinTech companies, particularly in areas such as digital lending, crypto trading, and payment platforms. This move comes in response to the rising issue of fraud, which according to the Office for National Statistics, has seen a 31% year-on-year increase.
The new law, part of the Economic Crime and Corporate Transparency Act, makes fraud prevention a legal obligation for FinTech firms. Companies that fail to demonstrate "reasonable fraud prevention procedures" can face unlimited fines. The offence is designed to drive a culture of prevention, similar to the "failure to prevent bribery" offence introduced in 2010.
Cindy van Niekerk, CEO of digital identity platform Umazi, views this new law as an opportunity for innovation. She believes that it will drive innovation in the digital identity verification space. Van Niekerk is confident that companies that adapt quickly to the new requirements will set a new standard for transparency and resilience in the UK economy.
The new law encourages businesses to embed digital identity verification and audit trails into their operations. Large companies, including FinTechs, can be prosecuted if an employee, subsidiary, agent, or associated party commits fraud for the company's benefit. To aid in this effort, the law encourages the use of technology-driven fraud prevention tools, such as AI-powered transaction monitoring and real-time identity checks.
The offence applies to companies that employ more than 250 people, generate over £36 million in turnover, or hold more than £18 million in assets. This new measure aims to build stronger trust with customers, partners, and investors by complying with the new regulations. Since September 3, 2025, fintech companies in the UK have been under this new legal obligation.
It's important to note that this new law does not involve the acquisition of any company, unlike the recent news about Aryza acquiring Australia's Bravure. Nor does it involve a partnership between Infosys Finacle and Mastercard, as reported in another article.
In conclusion, the UK's new "failure to prevent fraud" offence marks a significant step towards enhancing regulatory oversight and promoting transparency in the FinTech sector. Companies that adapt swiftly to these new requirements will not only avoid penalties and unlimited fines but also set a new standard for trust and resilience in the UK economy.
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