Money Laundering: Review of the Reporting ... - Dematerialised ID

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kpmg Review of the regime for handling Suspicious Activity Reports Report of recommendations KPMG LLP 1.4.2 The aims of the review and subsequent report were placed in the context of the Asset Recovery Strategy (“ARS”), including inter alia “To: • Make greater use of the investigation of criminal assets in the fight against crime. • Identify and resolve issues to ensure that the UK has an effective STR reporting regime.” 1.5 Uses of report 1.5.1 This report has been prepared by KPMG using information and opinions provided to us by a range of entities and individuals, both within Government and a number of interested Government agencies, the various LEAs involved in the fight against financial crime, and the private sector. In many cases this information was provided on a confidential basis in the expectation that it could not be identified as being provided by particular individuals or organisations. 1.5.2 Our report is strictly private and confidential and is provided on the basis that it is for the information of NCIS only. It is prepared solely for the purpose of our terms of reference dated 15 November 2002 (as varied by our letter of 23 January 2003). It must not be relied upon for any other purpose. Our report must not be copied or disclosed, other than to UK Government or UK Government Agencies, or otherwise quoted or referred to, in whole or in part, without our prior written consent. We recognise, however, that our report is likely to be used as the basis for implementation of our recommendations by a number of parties and anticipate that such consent will be granted (at the request of NCIS) provided the recipients acknowledge that the report was not developed to address their own specific circumstances. 1.6 Sources of information 1.6.1 We have used a number of sources of information in producing our report and recommendations. We have also subjected our analyses and findings to a range of challenge processes. Project Management Panel 1.6.2 We have held five meetings with the PMP 2 since the project began. These gave us the opportunity to report on our progress and our interim findings and analyses, and to debate the issues as they emerged. Meetings with stakeholders 1.6.3 We held 29 initial meetings with interested stakeholders in the SAR process in late 2002, prior to beginning our detailed review. These meetings provided information on the operation of the system, aspects which were not satisfactory, and the potential areas for improvement. 2 16 December 2002, 31 January 2003, 28 February 2003, 17 April 2003 and 15 May 2003. jo/fh/519 10
kpmg Review of the regime for handling Suspicious Activity Reports Report of recommendations KPMG LLP Questionnaires 1.6.4 We designed and submitted two general and two specific questionnaires to a variety of recipients to obtain information across the population of disclosing organisations and the LEAs. 1.6.5 Full details of the questionnaires which we circulated may be found in Appendix 1. We followed up the questionnaire responses with nine meetings with disclosing institutions and nine with LEAs. ECB: survey and meetings 1.6.6 We designed a survey to help determine the actual time taken to process individual disclosures for the three key work stages within ECB, namely the inputting of information from SARs onto Elmer (the ECB SAR database), verification of that data, and matching (when possible) that data to information held on Elmer and Alert (the NCIS database of intelligence relating to Level 3 crime) together with dissemination of the data to the relevant LEAs. This was completed for SARs worked on by any six ECB staff (two in each work stage) for 15 different days during the survey period. 1.6.7 We held 17 meetings with ECB staff to understand their process and methodology. This built upon KPMG’s understanding of ECB and Elmer developed in mid-2002 in an earlier project undertaken for ECB on their internal procedures. Workshops 1.6.8 We held three three-hour workshops to discuss our preliminary recommendations 3 . These were attended by individuals from disclosing organisations, from ECB, from the range of LEAs and other interested parties (including the Home Office, HM Treasury and the Financial Services Authority (“FSA”)). 1.7 Caveats 1.7.1 There are inevitably a number of caveats which attend a report of this kind. 1.7.2 The work which we have conducted is not an audit of the processes in place either at the disclosing organisations, at ECB itself, or at the range of different LEAs concerned. We have in part relied upon information and opinions provided to us by the range of participants, which we have accepted in good faith, although we have of course subjected them to challenge and discussed them in a range of meetings and workshops. 1.7.3 We have been reliant on obtaining responses to questionnaires for a significant portion of our fieldwork, albeit some were followed up with meetings to discuss the information. We have not received full responses to our questionnaires in all cases. 1.7.4 Many LEAs do not have management information systems which track what happens to SARs after they are received from ECB. This has hampered our analysis and assessment of the manner and efficacy in which the LEAs process the SARs. This has hindered our analysis of the progress and assessment of individual SARs and limited the responses 3 Quality of reporting, 18 March 2003; The role of NCIS ECB, 19 March 2003; The handling of SARs by LEAs, 4 April 2003. jo/fh/519 11
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