19 May 2020
The suspicious activity reporting regime is in need of a “wholesale revolution” that would allow financial institutions to deliver more actionable intelligence to investigators, according to Tom Keatinge, director of the Centre for Financial Crime and Security Studies at RUSI.
In a recent episode of KYC360’s AML Talk Show, Keatinge said that the system of reporting suspicious activity that was created years ago in the United Kingdom has since become outdated as the financial sector has evolved.
“What I think we ought to be doing is asking ‘is there a better way to harness the transaction monitoring and the KYC capabilities of financial institutions to generate genuinely evidence-based leads for law enforcement to act on?'” Keatinge said.
Law enforcement officials and financial intelligence units praise the regime because the filed reports contribute to various investigations and are housed in a searchable database, “but as a return on investment, no business case manager would ever be able to justify the system we have today,” he said.
“We really need a kind of wholesale revolution in that landscape, because remember, the data that is provided to FIUs through the suspicious activity report regime is a function of imperfect information that the banks have,” he said. “If we’re going to keep the SARs regime, we need to make sure the banks have better information on which to decide whether to file a SAR, and then the quality of that database will rise.”
At the moment, the ability of banks to identify what is or is not suspicious is “not nearly as good as it could be if they were properly co-opted in the system,” he said.
In his discussion with RiskScreen CEO Stephen Platt, Keatinge separately discussed whether post-9/11 efforts to cut off funding for terrorist organizations have achieved their goals as well as whether jurisdictions are “cramming” for their mutual-evaluation reviews on FATF standards rather than focusing on the goal of impeding financial crime.
Listen to the full episode here
RiskScreen: Eliminating Financial Crime with Smart Technology
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