It is best to say nothing at all – suspicious activity reporting in the financial services sector

Abstract

Purpose This paper aims to show how financial services firms determine whether customer transactions or behaviours meet the threshold for suspicious activity reporting mandated by the Terrorism Act 2000 and the Proceeds of Crime Act 2002, and how suspicious activity reporting is executed in practice. Design/methodology/approach Semi-structured interviews have been carried out among compliance professionals in UK financial services. Findings Two issues related to suspicious activity reporting have been identified. Firstly, a widespread misunderstanding about the tipping-off offence under s. 333 Proceeds of Crime Act 2002 has been identified, which appears to be a root cause for poor quality as well as over-reporting of suspicious activity. Secondly, issues related to the notice and moratorium periods used by the UK’s National Crime Agency appear to deter reporting of suspicious activity related to live transactions. Practical implications The paper makes suggestions for changes financial services firms and the UK’s National Crime Agency can make to improve the effectiveness of suspicious activity reporting. Originality/value The paper provides valuable insights which can be used to limit the flow of criminal funds, improve the quality of suspicious activity reporting and enhance the effectiveness of law enforcement agencies.