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 4 Key issues and challenges across the SAR regime 4.1 Summary 4.1.1 This section sets out the key issues and challenges across the regime, as identified by our review. These are: • The absence of a statement of the aims of the regime, combined with no single organisation taking ownership of the regime as a whole has meant that participants have focused on their own agendas (section 4.2). • The number of SARs disclosed has increased significantly over the last three years and is likely to continue to increase. The quality of SARs disclosed varies considerably (section 4.3). • Disclosing entities need to receive feedback on the disclosures they make for various reasons. LEAs provide insufficient feedback to ECB, which in turn is unable to provide the type and quality of feedback disclosing entities require (section 4.4). • The value added to the regime by ECB processes has not been maximised, due to a number of factors (section 4.5). • There is a growing backlog of SARs which have not been processed. This has implications for the usefulness of SARs to most LEAs (section 4.6). • The differing aims, knowledge, resource levels and focus of LEA activities and the use made of SARs has led to diverse outcomes, and some LEAs make better use of SARs than others (section 4.7). • There is a significant mismatch in resource allocated to the SAR regime between providers of SARs and NCIS and the LEAs (section 4.8). 4.2 Ownership of the SAR regime “The present regime is rapidly falling into disrepute” “There is a considerable amount of blame of everybody else for the failures of the system, rather than developing solutions which are best for everybody” “The ECB really has not got a grip of [the SAR system] and totally devalues it” Source: Interviewees and questionnaire respondents as part of KPMG’s review 4.2.1 There has been no clear public statement of the overarching aims of the SAR regime prior to the commencement of our review and no single organisation or group was identified as the owner of the SAR regime as a whole. Without such an owner there has been no strategic oversight of all parts of the reporting and investigation process to ensure that the actions and priorities of each group of the stakeholders are consistent with the operation of the regime as a whole. jo/fh/519 32
kpmg Review of the regime for handling Suspicious Activity Reports Report of recommendations KPMG LLP 4.2.2 A lack of clear common objectives has meant that some stakeholders have focused solely on their own issues and concerns and this has, at times, led to an apparent blame culture between participants. A lack of transparency and information available to stakeholders across the regime also contributes to this lack of trust. Relevant performance indicators 4.2.3 As there is no ownership of the SAR regime, there are no clear and appropriate tracking measures and management indicators across the process as a whole. Our review has highlighted that there is a significant lack of management information systems at a number of LEAs to allow tracking of the uses of SARs disseminated to them. Such systems would help track the effectiveness of the regime to help ensure that it is meeting its aims and objectives. ECB has two specific key performance indicators (“KPIs”), which are to process all fast-track SARs within 24 hours and 95% of all SARs within five days, but the current processing backlog makes the second of these irrelevant. These KPIs are process-driven and can therefore become an end in themselves at the expense of the quality of service provided by ECB. 4.3 Quantity of SARs and quality of reporting Growth in SAR reporting 4.3.1 The average number of SARs disclosed on an annual basis in the UK remained in a range between 13,700 (1995) and 18,408 (2000) in the years between 1994 and 2000. This figure jumped by 70% in 2001 to 31,251; it then more than doubled in 2002 to a total of 64,164. The indications are that this growth has continued in 2003, with 21,433 disclosures made in the first three months of the year. 9 Figure 4.1: Numbers of SARs received annually 120,000 100,000 80,000 60,000 40,000 20,000 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003* Source: NCIS ECB/KPMG estimate * Q1 actual and estimate for full year jo/fh/519 33
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