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

kpmg
Review of the regime for handling Suspicious Activity Reports
Report of recommendations
KPMG LLP
1 Introduction
1.1 Importance of the SAR regime
1.1.1 A wide variety of financial services companies and other entities provide Suspicious
Activity Reports (“SARs”) to the Economic Crime Branch (“ECB”) at the National
Criminal Intelligence Service (“NCIS”). ECB develops the criminal intelligence in these
SARs and disseminates the results to a range of Law Enforcement Agencies (“LEAs”).
SARs are fundamental building blocks in the identification of the flows of illegal and
illicit money within the UK economy, including money used for the financing of
terrorism and terrorist groups. As such, they provide crucial assistance in the
identification, disruption and prosecution of crime in the UK.
1.1.2 This system has been in place for a number of years. During this time there has been
significant change in the legislation, an increase in the number and range of entities which
disclose to ECB, and a large increase in the number of SARs disclosed to ECB. Given
the importance of the flow of information on suspicious activities and the effect of recent
changes on the regime (including the Proceeds of Crime Act 2002 (“PoCA”) it is timely
to review the effectiveness of the SAR regime.
1.1.3 All those to whom we have spoken believe that a strong and effective SAR regime would
provide crucial support in prosecuting criminals and depriving them of the proceeds of
their crimes. Those contributing to our review have been open with criticism, suggestions
and recommendations for change.
1.1.4 KPMG has discussed the SAR regime with a variety of individuals from providers of
SARs, ECB, LEAs and Government. We have tracked a number of SARs. We have
identified a number of issues which hinder the effectiveness of the SAR regime. This
report describes this work and provides cost effective recommendations where
improvements to the regime can be made.
1.2 Structure of the report
1.2.1 This report is in nine sections:
Section 1 provides an introduction and background to the production of the report.
Section 2 provides a summary of our report and recommendations.
Section 3 briefly describes the history of the SAR regime through the changing
legislative framework affecting the disclosure of suspicions to the authorities by financial
services companies and other relevant entities. It also identifies the aims of the regime.
Section 4 sets out the range of issues and challenges inherent within the current
arrangements for the reporting, processing and investigation of SARs.
Sections 5 to 9 contain KPMG’s recommendations, split between ensuring that the work
and changes identified in our report are appropriately overseen and monitored (section 5),
those that concentrate upon the work of ECB (section 6), those for improving the quality
of the SARs that are provided to ECB (section 7) and those to help ensure that the
jo/fh/519 7