The Home Office made a Call for Information on the operation of the SARs regime between 25 February and 25 March 2015, with a view to developing a more efficient model that reduces the burden on businesses complying with the regime. On 21 April 2016 the Home Office published a summary of the key responses to the consultation, setting out six key findings.
1. Defining the purpose of the SARs regime
Currently, the SARs regime fulfils the role of both the reporting and intelligence gathering mechanism. Many respondents believed that the regime is ineffective and want to see it used in a more active manner, rather than a box-ticking exercise.
2. Legislate to encourage information sharing
The responses highlighted that most respondents want to share relevant information to assist in tackling money laundering, but are concerned that existing legislation does not explicitly support the sharing of information. Although the Joint Money Laundering Intelligence Taskforce has made significant steps towards building trust between law enforcement agencies and the financial sector, respondents wanted explicit legal cover to continue this trend into the longer term.
3. Improve the quality and reduce the quantity of SARS
A number of respondents raised concerns regarding the phrasing of the reporting requirement in the Proceeds of Crime Act 2002. A lack of guidance to firms on what to look out for, the focus on an “all crimes regime” and an inadequate definition of “suspicion”, accompanied by the penalties for failing to report have led to a high number of defensive reports. This places a burden on the regime and detracts from the focus on serious crime. The Government recognises this issue and states its commitment to taking action to address it.
4. Clarification of the “tipping off” offence
Respondents were concerned that the tipping off offence is drawn too widely. It was argued that, in an age of fast transactions, a customer cannot avoid noticing that their transaction has been held up and can draw their own conclusions. Suggestions included restricting it to a deliberate action to inform the subject of an SAR for the purpose of assisting them, or scrapping the provision altogether and relying on words such as aiding and abetting. Respondents also requested a form of words, agreed by the NCA, to use with customers who question the delay of their transactions.
5. Improving the capabilities of the UKFIU
All sectors viewed the technical infrastructure and resources of the UK Financial Intelligence Unit (UKFIU) that support the regime as inadequate. The reporting sector felt that the IT system did not allow them to report as effectively as it could, and that the UKFIU was short of the capabilities necessary to utilise the information gathered through SARs.
6. Revising the consent regime
Many respondents viewed the consent regime as problematic, causing delays and difficulties with customers, and some view it as incompatible with their business. Law enforcement agencies believe that there has to be a mechanism that allows transactions that involve the transfer of criminal assets to be investigated and prevented.