I look down on him…

Earlier this month, the UK’s FIU, the National Crime Agency, published its “SARs Annual Report 2014”.  It has some SAR statistics and a few brief case studies, which are all useful for training, but I was keen to see how the different parts of the regulated sector are doing when it comes to reporting – the philosophy rather than the arithmetic, if you will.  And the comments are measured and tactful, but still revealing.

Banks made 15.8% more SARs this year than last, contributing a full 82.18% of all SARs.  And why is this?  Well, “the robust stance of banking industry regulators towards financial crime both in the UK and globally may have been a major influence on the volumes of SARs reported by banks”, apparently.  For “robust stance” read “stonking great fines”.  Congratulations all round in the casino sector, whose members have made 12.1% more SARs this year: “Continued work by the Gambling Commission with British casinos to drive up AML standards, and partnership with the NCA in a bid to drive up reporting standards within the industry, may account for the growth in SARs.”

On the other hand, the number of SARs submitted by money service businesses has decreased, “with the market constricting following the ‘de-risking’ in this sector by financial institutions [such that] the number of principal MSBs (those who would report) is down by 21%”.  Accountants are also reporting less, and earns a lightly veiled threat: “The UKFIU is currently working with the regulators/supervisors of this sector which will examine these reductions.”  Lawyers likewise: “The Solicitors Regulation Authority (SRA) has embarked upon a schedule of activity with solicitors and firms focusing on AML compliance.  As part of this work the SRA intends to try and understand why the number of SARs has reduced and will be working with key partners to do this.”

Bald reporting figures are not the whole story, of course, and far be it from me to suggest in any way that SARs should be made simply to keep the numbers up.  But given the amount of money that moves through their relationships with their clients, it does seem unlikely that only 8,540 incidents would happen – across all of the UK’s lawyers and accountants in a whole year – that would be worthy of a SAR.  Just the quickest Google search suggests that there are over 300,000 accountants and about 120,000 lawyers practising in the UK, so that’s (hold on: reaching for calculator) 420,000 professionals making 8,540 SARs… which means only two-hundreths of a SAR per professional across the whole year.  So they would need to work for fifty years to make a single SAR each.  Can’t be right.  Probably my maths gone wrong.  Let’s hope so, anyway.

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2 Responses to I look down on him…

  1. Roy McCarthy says:

    As far as lawyers are concerned though Susan (I admit an interest) much of their work is non-transactional. That leaves perhaps one in ten which involve financial transactions e.g. conveyancing, private loans. Most AML focus in on those files and spotting the odd dodgy one is like shooting fish in a barrel.
    Take into account legal professional privilege considerations which gives the MLRO pause, and I’m not surprised the figures are low compared with banks whose work is virtually all transaction-based.

  2. That’s a very pertinent and fair comment, Roy. But we should remember that we are now (perhaps always have been, but not explicitly) expected to report suspicious activity and not just transactions. So if a lawyer’s client asks them to draw up a contract that seems odd and might suggest a money laundering structure – even if the lawyer is not involved in moving any actual value through it – it could be worthy of a SAR. Remember how broadly the law defines “arrangements” (in the UK) or “assisting” elsewhere. So I can understand lawyerly AML “focus” on transactions, but I hope not to the exclusion of all else.
    Best wishes from Susan

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