On October 18, the Financial Conduct Authority (FCA) published a letter giving guidance on the distinction between suspicious activity reports (SARs) and suspicious transaction and order reports (STORs). The letter was sent in response to a request by UK Finance, a trade association, following a meeting of the ‘SARs Collaboration Working Group.’
In the letter, the FCA acknowledged that there is ‘significant overlap’ between the civil offences in the Market Abuse Regulation (MAR) and the criminal offences set out in the wider financial crime regime such as the Criminal Justice Act 1993. The letter explains that:
- STORs must be submitted to the FCA when ‘any person professionally arranging or executing transactions … has a reasonable suspicions that an order or transaction … could constitute insider dealing, market manipulation’ or an attempt to do either. This includes buy-side (e.g., investment managers), firms which professionally trade on their own account (e.g., proprietary traders), and non-financial firms if they trade on their own account (e.g., industrial firms for hedging purposes);
- SARs must be submitted to the National Crime Agency (NCA) when the firm knows or suspects that certain criminal offences have also occurred; and
- a firm’s obligation to submit a SAR is not satisfied by submitting a STOR, and vice versa. The letter states, ‘firms will have to consider, on a case by case basis, whether to submit a STOR, SAR or both.’
The letter also provides a link to the FCA’s Financial Crime Guide, which includes specific guidance on the adequacy of systems and controls for financial crime, as well as links to a recent FCA money-laundering thematic review, a Regulatory Technical Standard issued by the European Commission, and to a recent Q&A issued by the European Securities and Markets Authority (ESMA).
The letter is available here.