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 widening of the relevant offences and the additional requirement to report will result in a significant further increase in the number of disclosures made to ECB, and is therefore important for future planning by stakeholders in the SAR regime. 3.4 The aims of the SAR regime today Background 3.4.1 There have been significant legislative and regulatory developments over the 17 years since the introduction of the DTOA and its relatively limited drug-related focus. The SAR regime and the wider AML arrangements have developed in a relatively piecemeal fashion through a number of Government and private sector initiatives. In particular, the introduction of PoCA and the radical reforms of the AML legislation alongside the establishment of the ARA, together with the powers granted to the FSA at N2, make this an appropriate time to revisit the aims and intentions of the regime as a whole. Development of the aims of the regime 3.4.2 We have developed a statement of the aims of the SAR regime as part of our work. In doing so we prepared an initial draft text which was then debated widely within the PMP to ensure that we had obtained the views of the range of stakeholders concerned with the regime. It should be noted that the aims of the regime set out below are identified in order of impact and not by their relative priority. Statement of the aims of the SAR regime The UK’s SAR regime supports both the ARS and the operation of the criminal justice system, and works alongside our international commitments to combat money laundering. Its aims are to: • Deter and displace money laundering and predicate offences. • Detect money laundering and predicate offences, identify the proceeds, and contribute to the investigation of these crimes. • Assist in disrupting money laundering and predicate offences through depriving criminals of their assets, taxation and other interventions, including prosecution and conviction of offenders. Essential outcomes In the long-term, a targeted and effective SAR regime will lead to: • A reduction in money laundering and predicate offences through identification and recovery of criminal assets. jo/fh/519 28
kpmg Review of the regime for handling Suspicious Activity Reports Report of recommendations KPMG LLP • The protection and enhancement of the reputation of the AML achievements of the UK and its financial institutions. • Identification of both immediate and long-term criminal trends and typologies, in particular in relation to serious, organised and volume crime in the UK. Measurable indicators A credible SAR regime will result in: • Increases in the amounts of criminal assets recovered through use of SARs. • Increases in convictions and other disruptions of criminal activity stemming from SARs. Analysis of the aims 3.4.3 The widest and overarching aim is that by establishing a process and framework for the reporting of suspicious activity which is well publicised and apparent to those who use both financial services and other businesses caught within the parameters of the legislation, there is an initial deterrence to criminals who are seeking to convert the initial proceeds of their crimes into legitimate assets through these channels. 3.4.4 The second is that the information provided through SARs on the laundering of the proceeds of crime assists LEAs to detect, identify and investigate both money laundering offences and the underlying predicate offences. 3.4.5 Finally, the consequent actions taken by LEAs, including the Inland Revenue (“IR”), on the basis of intelligence provided through the SAR regime, whether prosecution, taxation or confiscation, help to disrupt both underlying criminal activity and any subsequent attempts to launder the proceeds. Relation between the aims of the regime and KPMG’s review 3.4.6 Having identified the aims and intentions behind the SAR regime, and therefore what the regime ought to achieve, our fieldwork has concentrated upon what it is in fact achieving. In conducting this analysis we have identified a range of shortfalls within the application of the regime. Our recommendations for change are generated by and derived from these shortfalls, recognising the wider context of the regime. Relationships with other key Government initiatives and priorities 3.4.7 The SAR regime is driven by Government legislation and must be seen in the context of other Government initiatives. The 2001 ARS reflects a key Government priority to take the profit out of crime and dismantle and disrupt criminal activity by recovering the proceeds of crime, as does the establishment of the Concerted Inter-Agency Criminal Finances Action Group (“CICFA”). The disclosure of SARs and their use by LEAs in investigating potential criminal activity provides significant fuel for the Government’s confiscation and AML strategy and provides a fundamental support to it. It allows intelligence on suspicious financial transactions to be used by the relevant LEAs in their investigations. Depending on the circumstances, the new powers established in PoCA to jo/fh/519 29
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