Press release 14th Jan 2019

Rise in number of Suspicious Activity Reports should not mask failing system

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14th January 2019, London – According to a new report by the National Crime Agency (NCA) last year saw a rise in reports from the private sector of activity involving suspected money laundering – but the system as a whole remains inadequate whilst key sectors are still under reporting, according to Transparency International UK.

The report states that less than one per cent of the more than £100 billion in illicit funds estimated to pass through the UK each year is stopped as a result of Suspicious Activity Reports (SARs). This echoes the recent Financial Action Task Force UK review that found the system for receiving SARs being unfit for purpose. A lack of funding from the Government means around 80 staff are tasked with investigating more than 460,000 reports, whilst an out-of-date IT system to receive and analyse reports is undermining efforts. We welcome the intention to reform the badly out of date IT system – this will be fundamental to having a system fit for the 21st century.

Despite the rise in SARs certain sectors particularly at risk of money laundering saw a significant decrease in the number of such reports. SARs from lawyers fell by 11 per cent despite law firms being an essential tool used by those seeking to launder dirty money into the UK. Likewise trust or company service providers filed just 53 SARs, but our research has found these firms are often responsible for forming and maintaining UK companies used by criminals to launder vast sums of money.

Whilst the financial sector is filing the most SARs, there are concerns that banks filing ‘defensive SARs’ to limit the liability in the event that transactions they process consist of illegal activity. This over-reporting has contributed to an unmanageable volume of SARs for investigators to follow up – leaving genuine cases unable to be followed up on.

Rachel Davies Teka, Head of Advocacy at Transparency International UK, said:

“With the scale of dirty money flowing into and through the UK each year remaining as high as ever it is vital that those on the frontline of defending against this activity are vigilant and acting on suspicious activity. On the one hand it’s good news that the number of SARs is up but it’s very worrying that they are down in key sectors such as lawyers and trust or company service providers.” 

“This evidence contributes to concerns that there are professionals in the UK who are unknowingly or complicitly involved in the movement of criminal funds. Law enforcement agencies should be coming down hard on those individuals and firms found not to have submitted reports after incidents of clear money laundering. When UK professionals turn a blind eye to corrupt money, they are helping to hide wealth that has been stolen from very often the poorest parts of the world. This is why we would like to see a failure to prevent money laundering criminal offence; something the Government has long-promised but until now failed to deliver.” 

“Those seeking to hide illicit wealth are constantly finding new ways to do so and the use of modern and up-to-date resources is a vital part of countering this. We call on the Government to ensure law enforcement is properly resourced with both staff and equipment to act on suspicious activity.”