In April 2016 the government made a commitment in its Action Plan for Anti-Money Laundering and Counter-Terrorist Financing to reform the SARs regime.
Plans have been in the pipeline for several years. But the increase of nearly ten per cent in the total number of SARs the National Crime Agency (NCA) received in 2015-16 compared to 2014-15, and the eight-fold increase in numbers since 2002, has given added impetus to efforts to update the NCA’s IT infrastructure which was originally designed to cope with far fewer disclosures.
The SARs reform programme, established in the wake of the Action Plan, brings together government agencies, law enforcement and professional services sector representatives, including the Law Society.
The programme is ambitious and will cover ways to:
- improve the quality and quantity of reporting by analysing the drivers behind higher and lower value SARs
- introduce tiering of SARs, allowing reporters to indicate whether they believe they are providing valuable intelligence to UK Financial Intelligence Unit (UKFIU)
- facilitate mutual feedback between intelligence users and providers
- improve the user experience of the current IT system
SARs reform is being pursued alongside a separate Law Commission review of how the Defence Against Money Laundering (‘consent’) regime operates. The number of consent SARs has grown in recent years, prompting UKFIU research into the pressures behind this growth. The Law Society will continue to insist that consent SARs be retained in the absence of accompanying changes to the scope of the reasonable excuse defence or the wide definition of criminal property.
For reform plans to move beyond reports and discussion, additional resources will need to be provided by the government, possibly in partnership with the largest private sector users, the banks.
An improved SARs regime should result in better and more frequent publication of typologies to help solicitors understand how criminals might approach them, and what to look out for.
We will update solicitors as specific changes are announced.