Пятница, 09 августа 2019

5. Guidance on suspicion

5.51 Of those who responded, consultees were overwhelmingly in favour of statutory guidance being issued on the concept of suspicion. Twenty-eight out of 32 consultees (87.5%) were in favour of this provisional proposal. We highlighted the potential problems that arise from having multiple sources of guidance to address universal legal concepts in our Consultation Paper. Consultees endorsed this view in their support for a single source of guidance on the law. The Association of British Insurers said that one set of guidance will improve consistency of application. The CPS went even further in their support of our provisional proposal adding that a single piece of guidance ought to exist to the exclusion of the others.

5.52 Consultees were also asked whether they would support the introduction of statutory guidance that would address the legal phrase «reasonable grounds to suspect» if the threshold for making a required disclosure were to be amended. We anticipated that this would assist by providing lists of indicative factors all contained in one place, accessible by all reporters. It was also intended to reduce the number of requests for further information that UKFIU staff have to make as part of their day-to-day processing of authorised disclosures. Again, a similar picture emerged: consultees were largely in favour, even those who did not support a change to the threshold recognised the benefits of statutory guidance if such a change were to be enacted.

The National Casino Forum suggested that it would be «imperative» and the Association of Foreign Banks agreed, it would be essential as this would remove some subjectivity out of the reporter's decision.

5.53 As the Proceeds of Crime Lawyers Association («POCLA») observed in its response to our Consultation Paper, reporters tended to adopt a cautious approach to the suspicion test rather than a genuinely risk-based assessment:

From regularly advising professionals and others in this sector, we are in no doubt that the high volume of lower-value reports is due to the imposition of personal criminal liability for failure to make a report where one is due combined with the low threshold for reporting. Reports must be made (absent special circumstances) if there is a possibility, which is more than fanciful, that funds are criminally derived even if the reporter believes them to be legitimate. The courts will back a reporter and absolve them of liability to their customer even if there were no reasonable grounds to make a report, provided the reporter held a genuine suspicion (see K v NWB; Shah v HSBC). It is therefore unsurprising that reporters err on the side of caution, making reports which are of limited value. The danger of casting the net this wide, is that valuable resources are deployed trawling through low grade material, allowing the larger fish and their associated predators to escape detection.

5.54 The CPS commended and supported our provisional proposal of definitive guidance on the threshold to be applied:

There should be a single piece of guidance, to the exclusion of others, to provide a clear explanation of these provisions. The guidance may not be able to provide exhaustive definitions but it should be able to inform and frame how decisions concerning suspicion should be taken and it should be the only guidance required in order to do so.

5.55 There was significant support from law enforcement agencies for this proposal. The City of London Police supported the proposal to introduce a statutory requirement for Government to produce guidance and considered that it would be helpful. The City of London Police also suggested that it would be most effective if the statutory requirement prescribed who would produce the guidance, the intended audience and the frequency with which it would be reviewed.

5.56 Additionally, the Metropolitan Police Service («MPS») who are allocated approximately 32% of all SARs by the UKFIU once they have been processed, agreed that a single source of guidance would be welcomed:

The MPS agree that it would be beneficial for the UK to develop a single authoritative source of guidance, if it is developed by all actors, including other end users in addition to the NCA. It is apparent, from engaging with individual reporters, that many need assistance and advice. Collective learning and training should be considered alongside any authoritative document produced, to provide clarity and enhance the quality of reporting and the regime.

Reporters frequently articulate that they are unsure on what to include within their responses. The MPS feel the development of a single, comprehensive, authoritative source of guidance, would improve quality and consistency of SAR reporting. The MPS feel end-users should also be part of this process.

5.57 The NCA were also prepared to explore a single source of guidance with the objective of improving SARs reporting:

The summary in the Consultation Paper is a helpful source. We are content to explore, with policy departments, the development of a single, comprehensive, authoritative source of guidance (developed by Government, regulators, UKFIU and reporters) if that would drive up the clarity and consistency of SAR reporting.

5.58 There was broad support amongst those who responded from the regulated sector for a single authoritative source of guidance on suspicion. UK Finance welcomed guidance on the suspicion threshold but indicated that its preference is for guidance to be drafted in partnership with the public sector:

We agree it would be helpful for POCA to contain a requirement for the Government to produce guidance on the suspicion threshold. One of the challenges around the operation of the system is the unwillingness of any part of the public sector to produce guidance or provide feedback to help reporters better identify what is and is not suspicious (outside limited forums, such as the Joint Money Laundering Intelligence Taskforce). Any guidance would need to be consistently applied and granular enough to support adherence. High level and generic guidance would be unlikely to assist reporters.

5.59 Ashurst LLP were in favour of guidance on suspicion if suspicion remained as the requisite threshold for reporting:

A single source of definitive guidance could well improve the application of the suspicion threshold. We do not have any specific proposals on how this should be defined but generally speaking, the provision of additional guidance in this regard would, we think, be helpful.

5.60 The Investment and Life Assurance Group («ILAG») agreed that guidance on suspicion would be proportionate and would deliver necessary improvements to quality. The Council for Licensed Conveyancers also agreed that POCA should contain a statutory requirement that Government produce guidance on suspicion. Likewise, the Personal Investment Management & Financial Advice Association submitted that a statutory requirement that the Government produce guidance on the suspicion threshold would be a positive development:

Comprehensive, clear and common-sense guidance would be beneficial, particularly if it contains best practice in relation to the types of issues commonly encountered in financial services and if it is updated periodically... Greater clarity on the suspicion threshold would allow firms to adopt a consistent approach and will help to reduce the number of low-quality SARs that are submitted on a defensive basis, freeing up law enforcement resources and reducing the burden on the private sector.

5.61 The Investment Association agreed with our provisional proposal and suggested that guidance on suspicion would help firms subject to reporting obligations to understand how suspicion should be interpreted:

A common understanding of what suspicion means, and the elements that can lead to it arising, is essential for all those involved. This would improve the consistency of application and make for a more effective SAR regime, with improved quality of reports and less defensive reporting.

Guidance, with a list of explicit factors, could then be used by firms when creating internal policies and training for staff to improve general awareness. Having a non- exhaustive list would allow for circumstances where the expertise and industry knowledge of individual Nominated Officers results in the identification of suspicious circumstances outside a pre-defined list and ensures that the concept of an individual's honesty held suspicion is retained.

5.62 Northumbria University's Financial Crime Compliance Research Group agreed with our provisional proposal:

Yes, we agree that Government should be required by POCA to provide guidance on the suspicion threshold. The threshold must be sufficiently high (to avoid over¬reporting and defensive reporting) and guidance on the interpretation of suspicion on the basis of objectivity and subjectivity is critical. In order to be useful, guidance must be sufficiently broad to avoid encouraging a tick-box culture among the regulated sector which could lead to unforeseen activities being missed.

5.63 A small number of consultees disagreed with our provisional proposal. For example, the Electronic Money Association («EMA») did not perceive there to be a problem with the meaning of suspicion. They argued that guidance would introduce unnecessary complexity into the reporting process.

5.64 Some consultees had reservations about the practical impact of statutory guidance. For instance, the Financial Conduct Authority («FCA») agreed in principle with the proposal but had some doubts about how helpful any additional guidance might ultimately be.

5.65 In contrast, a minority of consultees were unpersuaded by the need for statutory guidance at all. The Law Society of England and Wales stated that:

Anyone looking to find out the meaning of suspicion need only look at the case law. It is unlikely that Government guidance would do anything other than codify case law, meaning the guidance would need to reflect case law as it evolved. While this is not impossible, we do not see how doing so would help minimise the number of low value SARs.

5.66 The Law Society of England and Wales's response did not deal with the substance of our provisional proposal that guidance should demonstrate how the test pronounced in Da Silva should be applied in practice by identifying and cataloguing grounds or factors which may raise a suspicion. It is notable that the majority of responses of individuals and firms working within the legal sector were in favour of statutory guidance.

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