Suspicious activity reporting in the United Kingdom and the United States: statutory obligations of auditors and optimal harvesting of information
| Date | 06 November 2023 |
| Pages | 432-444 |
| DOI | https://doi.org/10.1108/JMLC-08-2023-0131 |
| Published date | 06 November 2023 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Simon D. Norton |
Suspicious activity reporting in
the United Kingdom and the
United States: statutory
obligations of auditors and optimal
harvesting of information
Simon D. Norton
Cardiff Business School, Accounting and Finance Section,
Cardiff University, Cardiff, UK
Abstract
Purpose –This study aims to evaluatethe advantages and disadvantages of auditor mandatory suspicious
activity reporting versusthe exercise of professional judgement in the anti-money laundering regimes of the
UK and the USA.
Design/methodology/approach –The research draws upon the following sources. Firstly, statistics
provided by the UK National Crime Agency, 2019 (NCA) regarding suspicious activity report (SAR) filing
rates. Secondly, anti-money laundering legislation in the USA and UK. Thirdly, statements made in the
politicaldomain in the USA, particularly those which raised constitutionalconcerns during the progress of the
Patriot Act 2001. Finally, statements and recommendations by a UK Parliamentary Commissionenquiring
into the effectivenessof the suspicious activity reporting regime.
Findings –The UK reporting regimedoes not accommodate professional judgement, resultingin the filing
of SARs with limited intelligence value. This contrasts with discretionary reporting in theUSA: voluntary
reporting guides and influencesauditor behaviour rather than mandating it. Defensive filing by UK auditors
(defence to anti-moneylaunderings [DAMLs]) has increased in recent years but the numberof SARs filed has
declined.
Originality/value –The study evaluates auditor behavioural responses to legislative regimes which
mandate or alternatively accommodate discretion in the reporting suspicion of money laundering.
Consideration of constitutionaland judicial activism in this context is a novel contribution to the literature.
For its theoretical framework the study uses Foucault’s conceptof discipline of the self to evaluate auditor
behaviourunder both regimes.
Keywords Money laundering, Suspicious activity report, Proceeds of Crime Act 2002,
Auditor professional judgement, Bank Secrecy Act 1970, Patriot Act 2001
Paper type Research paper
1. Introduction
In October 1931 Alphonse “Scarface”Capone was convicted of tax evasion in the District
Court of the USA for the Northern District of Illinois, Eastern Division. Evidence of money
laundering was provided by his lawyer and bookkeeper,Edward J. O’Hare: investigation by
the Special Intelligence Unit of the Treasury Department was conducted by the forensic
accountant Frank Wilson (Czarniawska, 2012). The case against Capone was based on
Funding: There is no funding source to report.
Declarations of competing interests: none.
JMLC
27,3
432
Journalof Money Laundering
Control
Vol.27 No. 3, 2024
pp. 432-444
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-08-2023-0131
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
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