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

kpmg
Review of the regime for handling Suspicious Activity Reports
Report of recommendations
KPMG LLP
Rejection of poor quality SARs
7.4.7 It is clear that ECB is currently forced to allocate significant time and resource within its
ongoing processes because of the submission of poor quality SARs by disclosing entities.
In order to drive up the quality of reporting by disclosing entities, and as a key part of its
ongoing role, ECB should therefore reject poor quality SARs submitted by disclosing
entities.
7.4.8 There should be a number of reasons for rejection:
• Inappropriate method of submission of SAR: if a SAR is provided to ECB in an
inappropriate form, such as where a manual submission is provided by a regulated
entity where no exemption has been given for not reporting electronically (see section
6.4.2 above), this should be sent back to the disclosing entity by the DMC with an
explanation that this is the case and a request that it be submitted appropriately.
• Incomplete SAR: if all the mandatory fields required on the SAR are not filled in or
if a disclosing entity has not provided all the necessary information, the DMC should
return the SAR to the relevant entity with a request for additional information to
complete the SAR. It should then be the responsibility of the disclosing entity to
obtain the missing information and re-submit the SAR.
• Poor quality SAR: a SAR could be of poor quality for various reasons, including
where there is no obvious reason for suspicion related to the particular transaction or
activity, or where the reason for suspicion is poorly explained and therefore not
obvious. In such a case the LU should return the SAR to the disclosing entity stating
that the SAR is not of a sufficient quality to allow the information to be used, and
providing guidance on why this is the case. It should then be for the disclosing entity
to revise the SAR and re-submit it in a properly completed form.
7.4.9 Where necessary, staff from the LU should visit firms which continue to have problems
of quality to provide guidance for improvement.
Feedback to regulators concerning the quality of disclosures
7.4.10 ECB has no formal locus over the quality of reporting by disclosing entities other than by
the use of persuasion, which it currently uses in relation to poor quality reports from the
larger disclosing entities. Therefore, it should establish a closer working relationship with
the FSA and other regulators. Where there is ongoing evidence that individual regulated
entities are persistently poor reporters, and that the LU’s ongoing dialogue with the firm
has not led to an improvement in the quality of reporting, the LU should contact the
relevant regulator.
7.4.11 The LU should provide the regulator with details (copied to the firm concerned) of the
nature and incidence of poor reporting and the response of the disclosing entity to the
LU’s initial contact with them. The relevant regulator can then take these issues forward
within the regulatory relationship and framework. In doing so, we believe that this should
primarily focus on institutions with inadequate procedures in place and those which
provide low quality, defensive or insufficient reporting, and to a lesser extent on those
where they had exercised their judgement on some occasions which subsequently proved
to be of poor quality.
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