The plain un-SAR-nished truth

Remember when Hugh Grant was PM in “Love Actually” and he found out that his tea-lady’s ex-boyfriend had been nasty to her and offered to have the scoundrel assassinated by the “absolutely charming” SAS?  “Ruthless trained killers are just a phone call away”, he tells her.  This comes to mind as I prepare to criticise the National Crime Agency – although only the FIU bit of it, and I’m hoping they’re not routinely armed.

The SARs regime has come in for a fair bit of bashing recently, not least in the FATF’s mutual evaluation of the UK’s AML efforts.  And for several years now we have been promised an overhaul of the SARs regime.  But the thing I want to mention today is the NCA’s cowardice *checks behind her for ruthless trained killers*.  I mean specifically their cowardice when it comes to rapping the knuckles of those who submit poor quality SARs, or no SARs at all.  I’ve been re-reading the NCA’s SARS annual reports, and in 2015 they said: “The UKFIU makes no comment as to the relative volume of reports from different sectors.  It is for the sectors and their supervisors to assess if the volume of SARs submitted is proportionate to the risks their sectors face.”  In 2017 they said: “The UKFIU makes no comment as to the relative volume of reports from different sectors.  It is for the sectors and their supervisors to assess if the volume of SARs submitted is proportionate to the risks their sectors face.”  And in 2018 they said: “The UKFIU makes no comment as to the relative volume of reports from different sectors.  It is for the sectors and their supervisors to assess if the volume of SARs submitted is proportionate to the risks their sectors face.”  Apart from showing a mastery of the cut and paste technique, this is disappointing.

Let’s be honest: no AML supervisory agency is going to say that they are worried by the low level of reporting in their sector, because that will reflect badly on them.  In the FCA’s “AML Annual report 2017/18” they have one pie chart which illustrates that 922,544 internal SARs were reported to MLROs within firms – no accompanying comment on whether this is proportionate to the money laundering risks faced by their supervised population.  In the Solicitors Regulation Authority’s “Annual Review 2016/17” they tell us that “the NCA received 4,878 reports from independent legal professionals from October 2015 to March 2017 [and] we anticipate we will see more in the coming year”.  And I can’t find anything from any of the other AML supervisors – which may be my failing, but if it’s out there, it’s well hidden.

I turn to the UK’s National Risk Assessment 2017, which goes further than anything else I have seen, but still treads gently.  With regard to accountants, “the 2015 NRA assessed that the number of SARs submitted by the accountancy sector was relatively low, and numbers have continued to decline”.  As for lawyers, “the 2015 NRA assessed that the number of SARs submitted by the legal sector was relatively low, and numbers have declined since that stage”.  You can almost see them shaking their heads in sorrow at the Home Office and HMT.

So if the NCA (who surely could be seen as independent and not favouring one sector over another) won’t venture an opinion along the lines of “how can it be that all the estate agents in the whole of the UK noticed only 710 dodgy things in the period April 2017 to March 2018 – fewer than were noticed by cheque cashers, or bookmakers, or those involved in spread betting?”, and nor will the AML supervisors, or even those responsible for compiling the National Risk Assessment, exactly who is going to call it?  Submitting SARs is not just a paper exercise that can be shunted down the queue when something more interesting/profitable comes along.  We’re up against real ruthless trained killers, and people traffickers, and child pornographers, and terrorist financiers – and to battle them we need to stop worrying about hurting the feelings of those who aren’t doing their SAR duty.

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8 Responses to The plain un-SAR-nished truth

  1. Andrew says:

    An interesting question to ask is “How many prosecutions have been brought for Failing to disclose per sec 330/331 POCA” ?. Also, sadly the UKFIU (and the NCA as a whole) suffers from extreme risk aversion which stultifies proactive, innovative management if the regime.

    • Thank you for your comment, Andrew, and welcome to the blog. That is another of my bugbears (I have quite the zoo of them) – how difficult it it to find information relating to money laundering prosecutions and convictions. They sometimes surface when a direct question is asked in parliament – the next time I spot that, I will make sure to share it. And you’re right about risk aversion: it’s creeping into all regulators and FIUs, as they (like so many agencies these days) fear litigation if they get it wrong.

  2. James Barclay says:

    Just noted the following article https://www.bbc.co.uk/news/business-47441554 and reference to Countrywide receiving a fine of £215,000 over money-laundering failings by HMRC. HMRC must have read your blog Sue as they now published a list of business for tax year 2018 to 2019 that have not complied with the 2017 money laundering regulations https://www.gov.uk/government/publications/businesses-not-complying-with-money-laundering-regulations-in-2018-to-2019/current-list-of-businesses-that-have-not-complied-with-the-2017-money-laundering-regulations. Tip of the iceberg I’m sure.

  3. Trevor Casbolt says:

    Well said Susan!

    >

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