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

kpmg
Review of the regime for handling Suspicious Activity Reports
Report of recommendations
KPMG LLP
• LEAs would also provide specific requests on an ongoing basis for particular types of
information or relating to particular investigations, which the LU would then pass on
to the wider pool of disclosing entities and the relevant regulators and trade bodies.
• LEAs should also record their interest in certain subjects through conducting specific
searches of the Elmer database. This will allow future SARs on these subjects to be
automatically allocated to the LEA that previously registered an interest.
7.5 Sectoral differences in compliance and enforcement
7.5.1 There is a difference in the oversight and regulation of different industries which are
potentially vulnerable to abuse and money laundering. The financial services industry is
regulated by the FSA, which was given specific responsibilities in relation to financial
crime under the FSMA in December 2001. It has, as a result, taken a more active and
interventionist role in relation to regulated entities’ AML controls. The nature of
regulation for solicitors and accountants is less focused on systems and controls within
the relevant firms or at sole practitioners. Other industries, whether estate agents, the art
and jewellery markets or companies specifically focused on company formation, are not
currently subject to such regulation although High Value Dealers will be regulated by
HMC&E once the 2003 MLRs come into effect.
7.5.2 Although the banks will continue to be fundamental in relation to AML activity, given
that ultimately the money related to criminal activity will need to pass through bank
accounts, money launderers are likely to focus on the weakest points in the financial
system. This will, in part, relate to less active regulation in certain sectors and the
potential for less focus on and compliance with the legal requirements. It will also follow
those products that are easier to use to launder money than others, where there is a less
obvious and accessible audit trail for a financial investigator. Cash remains the most
anonymous asset type, but others include jewellery and high value consumer goods.
Recommendation 14
Feedback on under-reporting sectors and individual firms
7.5.3 The IDU should carry out sectoral analysis of all the types of providers of SARs,
including the identification of any new sectors which potentially appear to be used for
money laundering activities. This information should then be discussed with the relevant
regulators (if there are any for the particular sector in question) or trade body/association.
The IDU should liaise with overseas FIUs, LEAs and the Egmont group to identify trends
that may affect or benefit the UK system.
Role of the Task Force
7.5.4 Both the analysis and the conclusions of these discussions should be provided to the Task
Force so it can periodically assess the nature of the regulatory and other measures in place
for encouraging compliance with the SAR regime. In particular, the Task Force should
review the effectiveness of the widening of the scope of the MLRs in June 2003, insofar
as they relate to SARs. It should mobilise individual regulators and trade associations to
adapt the nature and scope of their interventions where issues of uneven compliance arise.
jo/fh/519 70