It is best to say nothing at all – suspicious activity reporting in the financial services sector
| Date | 23 June 2023 |
| Pages | 302-310 |
| DOI | https://doi.org/10.1108/JFC-04-2023-0090 |
| Published date | 23 June 2023 |
| Author | Mario Menz |
It is best to say nothing at all –
suspicious activity reporting in the
financial services sector
Mario Menz
Guildhall School of Business and Law,
London Metropolitan University, London, UK
Abstract
Purpose –This paper aims to show how financialservices firms determine whether customer transactions
or behaviours meet the thresholdfor suspicious activity reporting mandated by the Terrorism Act2000 and
the Proceedsof Crime Act 2002, and how suspicious activity reportingis executed in practice.
Design/methodology/approach –Semi-structuredinterviews have been carried out among compliance
professionalsin UK financial services.
Findings –Two issues related to suspiciousactivity reporting have been identified. Firstly, a widespread
misunderstanding aboutthe tipping-off offence under s. 333 Proceeds of Crime Act 2002 has been identified,
which appears to be a root cause for poor qualityas well as over-reporting of suspicious activity. Secondly,
issues related to thenotice and moratorium periods used by the UK’s National Crime Agencyappear to deter
reportingof suspicious activity related to live transactions.
Practical implications –The paper makes suggestionsfor changes financial services firms and the UK’s
NationalCrime Agency can make to improve the effectiveness of suspiciousactivity reporting.
Originality/value –The paper provides valuable insightswhich can be used to limit the flow of criminal
funds, improve the qualityof suspicious activity reporting and enhance the effectivenessof law enforcement
agencies.
Keywords Money laundering, Suspicious activity, Proceeds of crime, Financial services,
United Kingdom
Paper type Research paper
Introduction
Over the past 30 years,trillions of dollars have been spent worldwide to stop criminals from
enjoying their ill-gottengains (Pol, 2020). With bank accounts seen as the entry-pointfor the
proceeds of crime into the wider financial system, banks have long been recognised as
playing an important role in the prevention and detection of money laundering (BIS, 1988).
Anti-money laundering (AML) laws and regulations aimed at financial services firms seek
to disrupt the financial activities of criminal organisations and prevent them from laundering
the proceeds of crime. To achieve this aim, laws and regulations impose a range of obligations
on financial services firms to identify and verify the identities of their customers, monitor
transactions and report suspicious activities to the relevant authorities (Booth et al., 2011).
Suspicious activity reporting
Suspicious activity reports (SARs) are an important source of information for law
enforcement agencies about potential criminal activity, including money laundering and
terrorist financing. In the United Kingdom (UK), financial services firms are required to
make SARs about suspicions of money laundering or terrorist financing, and suspicious
JFC
31,2
302
Journalof Financial Crime
Vol.31 No. 2, 2024
pp. 302-310
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-04-2023-0090
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
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