Under European Directives dealing with Anti Money Laundering Provisions and enshrined in UK Law by Regulation, all those financial institutions and professions (including solicitors) who undertake regulatory activities are obliged to notify the Authorities if they suspect that their businesses are being used to launder money. All financial institutions and professions (including lawyers) throughout Europe are required to do this by way of Suspicious Activity Reports.
A recent piece of research carried out by the Law Commission has disclosed some very interesting statistics:
• Of the over 634,000 Suspicious Activity Reports made in the eighteen month period between October 2015 and March 2017, 82% were submitted by banks.
• The estimated cost of Anti Money Laundering compliance across Europe is £5 billion.
• 65% of the Suspicious Activity Reports submitted to the Authorities come from just two countries – the UK and the Netherlands. Switzerland submitted no Suspicious Activity Reports and Germany submitted just a few thousand.
• The activity of the Law Enforcement Agencies led to the restraint of £36 million worth of assets over the same eighteen month period. Of course, this figure alone does not assess the value of the Suspicious Activity Reports in disrupting criminal activity, adding to the intelligence jigsaw and preventing terrorist attacks.
• Close to 10% of the Suspicious Activity Reports related to amounts of less than £250 (one being as low as 46p).
• A little less than 50% of the Suspicious Activity Reports related to serious crime.
The Law Commission wanted to look at whether the process of reporting suspicious activity could be streamlined to make it more focused and less burdensome on the financial institutions and professions which are required to comply with the system.
The Law Commission proposed that:
1. It would be helpful if formal guidance was issued on the definition of “suspicion”;
2. The forms provided by the different sectors on whom the requirement falls to be provide any more sector specific;
3. For offences of failing to report money laundering there would only be a reason to report if there were reasonable grounds to suspect that an offence was being committed (there would need to be evidence, and not just, for instance, a hunch).
4. For the main money laundering offences the threshold would remain simply that the reporter suspects an offence of concealing criminal proceeds or arranging the disposal of criminal proceeds or acquiring, using or possessing criminal proceeds. There is no requirement for evidence to back it up.
5. The requirement to report suspicion of money laundering should be for all crimes and not just serious crimes. This was because the reports relating to less serious crimes may still be indicative of more serious criminal behaviour.
6. Statutory guidance should be issued to assist Money Laundering Reporting Officers in deciding when to make a disclosure to the Authorities.
The changes proposed are modest but in combination should make the unenviable role of the Money Laundering Reporting Officer just a little easier to perform and the sleepless nights just a little fewer – it is to be hoped.