New Powers Against Organised and Financial Crime
Comments from ACCA
October 2006
ACCA is pleased to comment on certain aspects of the proposals in the above paper which appear to be relevant to us as a professional body representing accountants. Our main interest in this area stems from the fact that those of our members who work in public practice are subject to legal and professional requirements on money laundering and terrorist financing, although the proposals in the paper are also of direct relevance to those of our members who work in business and the public sector.
Our comments on specific consultation questions are set out below.
Q3. Data matching against SARs
The accountancy profession has been critical of the indiscriminate basis on which UK law requires suspicions to be reported to NCIS/SOCA. In particular, the profession has been critical of the fact that suspicions relating to trivial offences and immaterial amounts need to be reported in the same way as overtly serious matters, resulting in questionable benefit to the law enforcement system in return for the significant changes which have been imposed on the adviser-client relationship.
Despite these concerns about the real effectiveness of the SARs regime, accountants have become, after the banks, the largest source of SARs filed with SOCA. This suggests that accountants do take their reporting and other compliance duties very seriously. But there is still a widespread feeling among accountants that, of the c200,000 reports which are being filed every year, few of them are of any substantial interest to SOCA and/or the various law
enforcement agencies. Accountants and other regulated persons might feel more
persuaded of the intrinsic value of the SARs reporting regime if it could be demonstrated to them that their reports are in fact important and do make a positive contribution to law enforcement.
In this context, the proposal to make wider and more effective use of SARs by matching the content of individual SARs with other public sector databases would appear in principle to be a promising possibility, provided that such action is not found to infringe data protection restrictions.
One other issue which will have to be looked at seriously if the idea is to be taken further is the issue of reporter confidentiality. Those who file SARs under legal requirements to do so are entitled to expect that their identity will not be disclosed by SOCA or any other law enforcement agency. Unfortunately, over the period since the new law came into effect, we are aware that there have been many breaches of reporters' confidentiality, resulting in at best professional embarrassment and at worst actual or threatened violence. It is apparent that, if reporters are not completely satisfied that their confidentiality will be respected, they will chose not to report, especially if they have a well-founded fear of violent reprisals. The consequences of this may be that only trivial matters will be reported and the more serious cases will not be – such an outcome would clearly undermine the integrity of the whole system and defeat its very objective.
We acknowledge that the problem has been acknowledged and that it is being taken seriously by SOCA. But the wider exposure of SARs under the current proposal represents potentially a renewed threat to reporting confidentiality. We would urge that this issue be given the highest priority in the development of the proposal for data matching.
Q11. Amending the consent provisions of the Proceeds of Crime Act 2002
We suspect that the proposal to amend the consent provisions of POCA so as to allow SOCA more time to consider consent requests may in many cases prove impractical and unhelpful to reporters, even if it would be helpful to SOCA. Some reporters may be able to arrange their affairs so as to cope with a longer consent period but we consider that a general rule on this matter, to apply in all cases, would be inappropriate. The tipping off offence can be triggered if a reporter does anything to lead another person to believe that a report has been made on him. This wide definition could conceivably encompass cases where a reporter's decision to make himself unavailable arouses the client's suspicion. If the period for which a reporter had to make excuses to clients for inactivity was extended further, this would expose the reporter to a heightened danger of committing the offence of tipping off, as well as to further relationship management problems with clients. We consider it would be unreasonable to expose regulated persons to such a predicament.