Written By John Horan, Maze Investigations and Compliance Training LTD.
While we all wait for the 4th Directive on Money Laundering to pass into UK Law, let us look at where we are now.
From the perspective of an ex Financial Investigation Officer and Global MLRO, I despair at the bureaucratic approach to the whole area of AML.
From NCIS to SOCA to the NCA (and it had a name before that I just cannot recall it now) nothing other than the acronyms have changed. The same linear thinking permeates everything. “Let’s create boxes and tick them”.
The consent issue has dogged the regulated sector from its introduction in POCA way back in 2002. Numerous complaints have been made about the sheer impracticality of how to avoid telling a client why their money/house purchase/contract finalisation etc. has been delayed while the stressed SAR reporter awaits consent from the FIU. Indeed, if such a consent is refused and the 28-day moratorium period invoked, what do they do then with their client?
Criticism of consent has been met with howls of outrage from Law Enforcement on the grounds it is invaluable in the war on organised crime. Such was its alleged value it is being incorporated into 4MD (caveated to such as extent as to render it worthless).
Now Nigel Kirby who is the deputy director of the NCA economic crime command COMPLAINS reporting entities are using it to avoid carrying out their own obligations.
To quote Mr Kirby, “It does not seem right to me that it is the industry deciding what law enforcement looks at and does not look at,” (Source FT.com). I was under the impression that the FIU was supposed to examine all SARs, if that is not the case why are they being made? Of course the issue is that consent SARs require a response within a very tight time frame. The inference being that others are eventually examined.
While there may a resource issue for the FIU, why should it concern the reporting entity? The legislation requires SARs to be made as soon as practicable with no time relief for the reporter on the basis of lack of resources. Are we being told then that SARs are not examined unless the FIU are forced to do so, or at such a time as to render the examination meaningless? If not why Mr Kirby’s statement about what is andwhat is not looked at. I hope some sort of triage system is in place.
Unfortunately for the FIU HMIC has recently criticised the SAR regime in its entirety not just consent. In accepting the criticism, the NCA has admitted the system “was not effective or efficient for either the reporting sector or law enforcement” (source Buzzfeed). One issue is that a system designed to cope with 20,000 SARs a year is now expected to deal with 350,000+. What is the experience and competence of the FIU staff given disparate reporting entities of those entities?