R3 responds to Home Office consultation on money laundering and counter-terrorist financingg

Insolvency Practitioners have a key role to play in tackling fraud. Their extensive powers to investigate, and under civil litigation, pursue those involved in fraudulent financial activities puts them in a unique position to fight fraud and help the government deliver their policy objectives.

 

The Government’s Action Plan contained a number of proposals to which responses were sought. Among them were views on the change in focus of the suspicious activity reports (SARS) regime to entities responsible for money laundering and terrorist finance.

 

SARs is the end-to-end system by which industry spots suspicious activity related to money laundering or terrorist financing, and reports it to the UK Financial Intelligence Unit of the National Crime Agency.

 

These reports are then logged, analysed and relevant information is made available to law enforcement agencies.

 

Currently, the SARs regime is transaction focused, and R3 believes a shift to entities would be detrimental. Our members, who undertake considerable investigatory work, believe that the emphasis on transactions is critical. Transactions form paper trails which are the best way to identify those committing fraudulent activities, and are crucial in providing evidence to secure convictions. A focus on entities would be much more difficult to impose and carry out. R3 thinks there would be a great risk of undermining potential recoveries and a huge loss of intelligence if this change was to occur.

 

We were also concerned that the Government is considering removal of the SARs current consent regime, as it would be hugely harmful. The procedure was introduced to trap proceeds of crime, and no diminution of such policy should take place. It would be disappointing if constraints on government resources impinged on a scheme which has the potential to return considerable sums of money.

 

The consultation also refers to improving data sharing between private sector organisations to tackle money laundering and terrorist financing. Of course, R3 is in favour of greater cooperation and believes it would have positive benefits. However, the experience of our members is that the greatest blockage of information in investigations tends to be between government departments themselves. While ‘gateways’ exist, a conservative approach to sharing information tends to be taken which acts as an obstacle or deterrent to the steady flow of information.

 

In addition to the proposals in the Action Plan, we believe there a number of simple and practical measures which could be introduced to boost the fight against fraud. These are outlined in our Fraud Landscape paper.

 

We look forward to seeing the Government’s response to the consultation and hope that any changes to legislation are practical and will assist the profession in their efforts to tackle and disrupt financial criminal behaviour. 

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