Anti-money laundering: Advisory group set up
The Home Office has rejected changes proposed by the Law Commission almost five years ago, which would have introduced statutory guidance on the suspicious activity reports (SARs) made by professionals under the UK’s anti-money laundering regime (AML) regime.
The Home Office said it was “entirely appropriate” that sector regulators issue specific guidance, and the home secretary could already issue guidance where there was “genuine confusion around a concept or process”.
In its 2019 report on the SARs regime, the Law Commission said its “overarching recommendation” was the creation of an advisory board to “oversee drafting of guidance, to continue to measure the effectiveness of the reporting regime and to advise the secretary of state on ways to improve it”.
This would make the AML regime “more responsive to new and emerging threats, by bringing together experts in both the public and private sectors”.
The commission also said that to reduce “misunderstandings and a lack of clarity around reporting obligations”, the Proceeds of Crime Act 2002 (POCA) should be amended to impose an obligation on the home secretary to issue guidance.
Guidance was particularly needed on the threshold for ‘suspicion’, appropriate consent and the ‘reasonable excuse’ exemption.
In its response to the report last week, the Home Office rejected amending the Act in this way. “Whilst we recognise the broad scope and interpretation of POCA by reporters, this in part reflects the varied nature of businesses that constitute the AML regulated sector.
“The government views it as entirely appropriate that regulators are able to issue sector specific guidance.”
Where there was “genuine confusion around a concept or process”, the secretary of state could already issue guidance or a Home Office circular to provide clarification.
The Law Commission recommended that statutory guidance include consideration of the issue of low-value transactions. This was also rejected.
The Home Office accepted recommendations that the existing ‘consent regime’, allowing lawyers to complete transactions, should continue.
It continued to make changes to it given the rising number of SARs and authorised disclosures, such as increasing the lifestyle threshold of payments a bank or the like could make without triggering the need to report from £250 to £1,000.
Measures in the Economic Crime and Corporate Transparency Act 2023 would “further improve the efficiency and effectiveness of the regime”.
In response to the recommendation that an advisory board be created, the government set up the SARs advisory group in May 2021. This has private and public representation and meets biannually to “address the need for a continuous improvement mechanism”.
The Home Office also accepted the recommendation that the ‘all crimes’ approach to SARs should continue, putting “the burden of assessment and triage, where necessary, on law enforcement agencies as those best placed and most qualified to pass judgement”.
In all, the Home Office rejected six recommendations, accepted six and partially accepted seven.
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