'Professional bodies urged to improve reporting on suspicious activity'

OPBAS oversees 25 professional body supervisors (PBSs), including the Law Society, the Solicitors Regulation Authority and the Association of Chartered Certified Accountants. 

Relatedly, in an open letter to PBSs in April 2024, the Treasury and OPBAS have requested specific focus on the quality of suspicious activity reports (SARs) under the Proceeds of Crime Act 2002.

The Treasury and OPBAS observed improvements by the PBSs in describing type and number of measures taken, stating that across the board, the PBSs scoped reports satisfactorily. OPBAS noted that insights into threat assessments were also improving.  

OPBAS nonetheless stated that PBS reports would benefit from greater analysis of compliance failings and encouraged PBSs to use graphs, visual aids and case studies in reports, where possible.  

In 2023, OPBAS updated the sourcebook to reinforce required content in reports and PBSs are being urged by OPBAS to follow the sourcebook guidance. 

The Treasury and OPBAS are not alone in believing that PBS suspicious transaction reporting should be improved.

OPBAS stated that their particular focus would be in “outlining actions taken…in response to inadequacies...identified in the quality of the SARs submitted by PBS supervised populations”. 

Additionally, OPBAS reminded PBSs that they have the power to request all SAR’s submitted to the National Crime Agency.

The Treasury and OPBAS are not alone in believing that PBS suspicious transaction reporting should be improved. Over the past few years, the government and the Law Commission have conducted an in-depth analysis of the effectiveness of the SAR system. 

Among other things, this is the procedure where covered persons seek consent to transact pursuant to section 338 of the Proceeds of Crime Act.

In a long and comprehensive study, the Law Commission has noted inconsistencies in SAR reporting between the different PBSs. 

The Law Commission reported that in certain sectors, principally the banking sector, there was evidence of very good reporting, even to the point of “over-reporting” or “defensive” reporting. However, in some sectors, the Law Commission concluded that there was marked under-reporting of money laundering concerns.  

PBS reporting will continue to be heavily scrutinised.

The twin concerns highlighted by the Treasury and OPBAS – seeking improvement and consistency of reports from the 25 PBSs, as well as a focus on more rigorous assessment of the quality of suspicious activity reports – mirror two of the Financial Action Task Force's action items arising from FATF’s 2018 and 2022 Member Evaluation Report. 

No doubt the stimulus for the open letter is correcting these related FATF concerns prior to the UK’s upcoming FATF Member Evaluation Report scheduled for 2027. 

Therefore, we perceive that PBS reporting will continue to be heavily scrutinised and inadequate and inconsistent reporting will result in dialogue between the PBS and OPBAS until OPBAS is satisfied with the quality of the report. 

OPBAS has stated that it will give detailed feedback to each PBS where it believes there is room for improvement in the report and help prepare the PBS for the next reporting cycle. 

The next set of PBS reports are to be submitted to the regulator on or before November 1 2024. 

We perceive that each PBS will have to ensure that reports are consistent with OPBAS expectations and, in particular, scrutinise and analyse SARs as part of the overall reporting to OPBAS.

Matthew Cowie is a partner at Rahman Ravelli