Среда, 31 июля 2019 апдейт:

1. History of the project


1.57 Work began on the project in February 2018. We engaged with a wide range of stakeholders. We heard first-hand from those working within the system about how the consent regime operates. We met with staff at the UKFIU, representatives from law enforcement agencies, officials from government departments, the judiciary, prosecutors, supervisors and reporting entities from across the regulated sector.

1.58 We also heard directly from practitioners who have represented individuals and entities who have been the subject of a disclosure, as well as those who have represented the NCA or law enforcement agencies in related proceedings. We learned of the personal experiences of those who had a personal or business account frozen from the subject of a disclosure whose accounts were subsequently re- opened.

1.59 Additionally, we sought input from leading academics in this field on how the existing system might be improved. In total, we met with over 60 individuals with relevant experience of the consent regime in practice or from their own research.

1.60 We held a public symposium on 6 July 2018 at the Institute of Advanced Legal Studies. This was attended by over 100 people including anti-money laundering professionals, academics, practitioners, civil servants and individuals who work in law enforcement, as well as staff from the NCA and the UKFIU.

1.61 We published our Consultation Paper on 20 July 2018. It generated considerable interest and stimulated debate on the efficiency and efficacy of the consent regime.

1.62 The consultation period ran until 5 October 2018. In total we received 56 consultation responses. These responses came from:

(1) 12 entities in the regulated sector;

(2) 19 supervisory authorities, other appropriate bodies or trade organisations;

(3) five police and prosecuting authorities;

(4) 16 individuals, practitioners and academics;

(5) three non-governmental organisations; and

(6) a joint response from the Home Office and HM Treasury.

1.63 We draw upon the valuable information and comments in these consultation responses throughout this report.

The SARs Reform Programme

1.64 Our work is separate from but complementary to that of the SARs Reform Programme. That is a public-private partnership between the Home Office, the NCA and UK Finance. This project will make proposals for operational reform, including improvements to IT systems, to make use of modern technology and data analytics software. Throughout the duration of our project we have been mindful of the work of the SARs Reform Programme. Their operational review of SARs has the same stakeholders in common as our legislative review of Part 7 of POCA. We have therefore aimed to ensure that our proposals are broadly aligned where there may be scope for overlap. This is to ensure that that our recommendations for reform are relevant, realistic and have the support of those that they may affect.

Purpose of data analysis

1.65 In our Consultation Paper we drew attention to the large volume of SARs, of which a significant proportion are authorised disclosures. We also observed that there is anecdotal evidence from stakeholders suggesting that the quality of disclosures is poor in some cases. We identified four principal reasons why the quality of reports might be affected:

(1) a low threshold of culpability for the principal money laundering offences. The reporter is exposed to criminal liability for a money laundering offence carrying a significant maximum penalty of imprisonment based on his or her mere suspicion of the property being criminal;

(2) individual criminal liability. The criminal liability of the reporter is personal; it is not the liability of the organisation for which they work. We were told that the combined effect of a low threshold and individual criminal liability is, understandably, an overly cautious approach to reporting. In some circumstances reporting is defensive in nature rather than reflecting a true assessment of the risk of money laundering in any given transaction;

(3) confusion as to obligations. Reporters are faced with a complex set of inter¬related reporting obligations with required and authorised disclosures requiring different approaches; and

(4) confusion as to the concept of suspicion. Some reporters struggle with applying the nebulous concept of suspicion. Consultees told us that the overall quality of the SAR is diminished when reporters do not understand the concept of suspicion. Many SARs fail to provide relevant information that will assist law enforcement agencies in a presentable, easy-to-read format to enable swift action.

1.66 We made a number of provisional proposals designed to improve the quality of intelligence disclosed to law enforcement agencies and as a consequence, enhance the overall efficiency of the consent regime. Our analysis of SARs was designed to test the impact that our provisional proposals may have on the assumptions above and the scope and volume of reporting generally.

1.67 In undertaking this analysis our broad objectives were to quantify and measure:

(1) the proportion of authorised disclosures made in accordance with the current law;

(2) the proportion of authorised disclosures which fail to meet the threshold and are therefore made unnecessarily; and

(3) the proportion of authorised disclosures which could be improved upon or enhanced to provide focussed and well-presented intelligence which meets the needs of law enforcement agencies.

1.68 Although the focus of our research was on authorised disclosures we performed a smaller-scale analysis of required disclosures for comparison. However, we note that required disclosures are not time-sensitive and resource-intensive in the same way as authorised disclosures as they do not require any decision to be taken on consent. An additional objective in respect of required disclosures was to establish how rich they were as an intelligence source and whether our proposals could assist law enforcement agencies by improving the quality of intelligence that is provided.

Data analysis

1.69 In our Consultation Paper we highlighted the paucity of data available with which to measure the effectiveness of the regime. There had been no independent analysis of the quality of disclosures made to the UKFIU. This concern was echoed by many consultees. POCLA observed in its response:

As the Law Commission points out, the effectiveness of the current regime is unsupported by the evidence. The purpose of reporting is essentially two-fold. First to provide the authorities with information and intelligence on money laundering and financial crime. Secondly, to give the authorities an opportunity to freeze or restrain assets.

As to the first purpose, no data is available at all. As to the second, we are told that 634,113 reports were made between October 2015 and March 2017. Of those, only 1,558 were requests for consent to act where consent was refused. It is not clear from the statistics how many of these refusals resulted in freezing or, more importantly, prosecution and confiscation/recovery of assets, but the NCA identify only 36 cases where arrests were effected. It must be inferred that a substantial portion of those 36 cases did not result in prosecutions, convictions and asset confiscation. Consequently, the objectives of the reporting regime fall well short of being met.

1.70 Tristram Hicks (former Detective Superintendent on the national Criminal Finance Board), submitted a joint response with Ian Davidson (former Detective Superintendent with national financial investigation responsibility) and Professor Mike Levi, Cardiff University. They recognised that there was a shortage of evidence on the utility of SARs, but warned against concluding on that basis that the system was not working:

We recognise that excellent results from some SARs have not been fed back adequately to the reporting sector by the NCA (or its predecessor bodies). This has perhaps engendered a lack of confidence in their value and may have contributed to the existence of this consultation. We also recognise that end-users of SARs (the other seventy-six agencies) do not feed the benefits back adequately to the NCA. In our view it would be a better use of time and money to invest in explaining better the known value of SARs through research and routine case reviews than to cut them off at source. This would provide empirical evidence of the utility of SARs to both the reporting sector and to senior managers in law enforcement, particularly those without investigative or intelligence backgrounds. This would enhance the legitimacy of the regime among user groups and reinforce their commitment.

1.71 Following the publication of our Consultation Paper, we undertook an examination of a number of SARs that had been submitted to the NCA. This was the first independent analysis of its kind in the UK. This small-scale review gave us a valuable insight into the detailed inner workings of the consent regime. As noted above, our principal focus was on authorised disclosures but we were also able to look at a smaller sample of required disclosures for comparison. The results were striking and allowed us to assess the consultation responses against the evidence we collated.

1.72 In chapter 2 we outline our methodology and summarise our findings. We examine the data in more detail in each subsequent chapter and use it to inform our recommendations.

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