Well, we in the UK are streets ahead of our EU neighbours in one regard at least: the number of SARs we submit to our FIU. At the start of September, Europol published a report entitled “From Suspicion to Action: Converting financial intelligence into greater operational impact”. According to the press release, the report “provides insight into the AML framework and the extent of suspicious transaction reporting in the EU, highlights trends and developments, and gives recommendations on how the AML framework can be improved”. And one of its most notable findings is that of the 960,463 reports made in 2014 (the year under examination) to EU FIUs, 36% were made in the UK to the National Crime Agency. (31% were made in the Netherlands, but in that jurisdiction they have an obligation to make Unusual Transaction Reports of any transaction of €10,000 euros or more – which accounts for 85% of the reports made, so only 15% of the Dutch 31% are reports of suspicion. 100% of the UK’s 36% of the total are reports of suspicion.)
So why are we such snitches? The Europol report hazards a couple of guesses: “It is of course understandable that the UK would generate one of the highest reporting volumes in the EU: not only is it home to one of the largest financial markets in Europe, but in addition, it operates a Suspicious Activity Regime (SAR), which broadens the types of reports it can receive.” I’m not sure I understand this comment – surely a “suspicious” reporting regime would narrow the reports, while an “unusual” reporting regime would broaden…? The report continues: “Nonetheless, the figures are extremely high in comparison to other countries, which may also be a result of defensive or over reporting.” Now steady on there, that’s quite an accusation – although the report does quickly jam in a mollifying footnote admitting that “reporting guidance from the FCA, JSMLG and NCA is quite comprehensive on obligations and the UK FIU analysis of reports suggests that the majority of the financial institutions that submit SARs conduct at least a basic level of research and analysis prior to submission, and in some cases undertake quite substantial pre-submission examination”. And just what is “over reporting”? Putting in duplicate reports?
Whatever the reason, the statistics are startling, and I feel certain that the FATF evaluators will be asking questions when they visit us at the end of this year. If we’re so out of step with the jurisdictions with which we (currently) share the same base AML obligations, there must be a reason – and I am sure that some of you will hazard a guess!