Facebook
Twitter
  • Home
  • POCLA Committee
  • Articles and News
  • Events
  • Contact
  • Log In
  • Sign Up

Reform of the Suspicious Activity Regime: A Wild Goose Chase?

September 18, 2018admin

John Binns looks at the Law Commission’s consultation on the problem of Suspicious Activity Reports.

The Law Commission is currently consulting on aspects of the Suspicious Activity Reports (SARs) Regime under the Proceeds of Crime Act 2002 (POCA), with a deadline for responses of 5 October 2018. By way of background, this regime comprises two parts: the first provides defences to money laundering offences where the person submits a SAR to the National Crime Agency (NCA) and requests consent; the second requires banks and others in the regulated sector to submit SARs where they know or suspect, or have reasonable cause to suspect, that a person is money laundering.

The main trigger for the consultation is that the NCA is increasingly finding the volume of SARs it receives unmanageable, particularly those in the first category (which request consent). The consultation acknowledges two main causes for this: the ‘all crimes’ approach, by which laundering can be committed with the proceeds of literally any offence, however trivial; and the broad nature of ‘suspicion’ in this context. It asks for views on finding a narrower definition of ‘serious crime’, and of requiring statutory guidance on what ‘suspicion’ means. Peculiarly, it also suggests providing a defence for those who fail to report based on a suspicion that turns out to be true, but which he shows was not based on reasonable grounds.

The consultation also makes a number of suggestions in other areas. With respect to ‘mixed funds’ (that is, which contain a mix of tainted and untainted money), it suggests a specific defence for credit institutions who pay out the untainted part and leave the tainted part intact. With respect to the scope of the obligation to submit SARs, it suggests guidance that would limit the obligation to submit where (for instance) the offences concerned are of low value, or very old, or have no connection to the UK. It also asks about how consent is defined in this context, whether and when banks and others should share information about their customers, and possible new corporate offences to supplement or replace the regime.

The overall impression given by the consultation is of a regime that has multiple unconnected problems, and a distinct lack of an overarching vision of how to reform it. The most important problem in fact, barely acknowledged by the consultation, is that of resources: having set up in POCA a system that generates vast amounts of intelligence for law enforcement, the UK has singularly failed to put the investment into the NCA (and, more specifically, in the computer system that receives and analyses SARs) that is needed in order to make use of it.

The Law Commission has done its best to take a fair look at the regime within the parameters it has been given, but while a number of its suggestions have some merit, it can necessarily offer no magic bullet to solve the problem of SARs. Absent any realistic proposals on funding the system, the consultation and its responses can do little more than fiddle on the margins, proving the adage that no answer is what the wrong question begets.

John Binns is a partner at BCL and a specialist in money laundering and all aspects of POCA.

The Law Commission’s page on the consultation is here: https://www.lawcom.gov.uk/project/anti-money-laundering/

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Proceeds of Crime Lawyers Association | All Rights Reserved

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.Accept Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT