Memorandum by the British Bankers' Association
(BBA)
The British Bankers' Association (BBA) is grateful
for the opportunity to submit evidence as part of the Sub-Committee's
inquiry into EU and international cooperation to counter money
laundering and the financing of terrorism.
The focus of the Sub-Committee's inquiry is into
the nature and extent of Member States' cooperation in the global
response to money laundering and terrorist financing and not the
legal obligations imposed on Member States, credit and financial
institutions and related professions by the anti-money laundering
framework.
COOPERATION WITH
AND BETWEEN
FINANCIAL INTELLIGENCE
UNITS (FIUS)
How effective is cooperation among FIUs, and between
FIUs and other authorities? What are the practical results of
this cooperation?
Unable to comment. The BBA and its members are
not involved in the cooperation arrangements among FIUs and between
FIUs and other authorities.
How does the private sector feed into this cooperation?
To what extent is satisfactory feedback to the private sector
required by international standards, and what happens in practice?
BBA members, as part of the reporting sector under
the Proceeds of Crime Act, disclose information to the UK FIU
by filing suspicious transactions reports and other reports provided
for by relevant legislation. BBA members also provide information
in response to further requests from the FIU's. The Serious Organised
Crime Agency (SOCA) reports that in 2007-08 the BBA's members
submitted over 145,000 Suspicious Activity Reports (SARs) to the
UK FIU, sought consent on 5,238 occasions and submitted 838 SARs
specifically on terrorist finance.
Requirements on FIUs to provide feedback are established
by the Financial Action Task Force (FATF) standards and the third
Anti—Money Laundering Directive. FATF Recommendation 25
deals with feedback. The FATF has produced a document entitled
"Best Practice Guidance on Providing Feedback to reporting
Financial Institutions and Other Persons". According to this
guidance, the FIU should publicly release reports that include
statistics, typologies, and trends as well as information regarding
its activities. Competent authorities should establish guidelines
that will assist financial institutions and designated non-financial
businesses or professions ("DNFBPs") to implement and
comply with their respective AML/CFT requirements. At a minimum,
the guidelines should give assistance on issues covered under
the relevant FATF recommendations, including (i) a description
of money laundering (ML) and terrorist financing (TF) techniques
and methods, (ii) any additional measures that these institutions
and DNFBPs could take to ensure that their AML measures are effective.
It is important to note that under Article 35 of
the third AML/CFT Directive "Member States shall ensure that
wherever practicable timely feedback on the effectiveness and
follow-up of suspicious reports on money laundering and terrorist
financing is provided". Moreover, "Member States shall
ensure that the institutions and persons covered by this Directive
have access to up-to-date information on the practices of money
launderers and terrorist financers and on indications leading
to the recognition of suspicious transactions".
Therefore, the following types of feedback have
to be provided, according to the Directive:
— Feedback on suspicious transactions
reports, to inform the reporting entities about their follow-up;
this case-by-case feedback should be provided "wherever practicable".
— Feedback on money laundering and
terrorist financing practices (trends and typologies).
BBA members recognise the necessity to provide
feedback on specific cases does not imply the need of a systematic
case-by-case feedback, ie on each and every disclosure filed by
reporting entities. Indeed, according to the Directive, information
on the outcome of particular reports has to be fed back "wherever
practicable". However, the volume of cases receiving direct
feedback from the UK FIU is currently extremely low in comparison
to the number of SARs submitted by BBA members. Feedback can be
received in writing, along with indirect feedback by way of a
Court Order (although there need not be a direct correlation between
the SAR and the Order). Direct feedback is very occasionally received
also in the form of telephone calls or letters of thanks from
individual officers, although again volumes are very low. It has
been known that at the conclusion of a major investigation that
involved SARs being a submitted a de-briefing session is held
for interested parties.
The UK FIU does produce a range of information
and alert products that seek to provide general feedback to the
reporting sector on money laundering/terrorist financing typologies.
While helpful such information products tend to confirm prior
or existing knowledge of money laundering and terrorist financing
typologies. The BBA has called upon the UK FIU to involve the
reporting sector more regularly in the development and drafting
of information products to ensure these add value to recipients.
What is the extent of the feedback and input on
terrorist financing issues from intelligence and security services?
Unable to comment. The BBA and its members are
not aware of any feedback and terrorist financing issues from
the intelligence and security services.
What are the respective roles of Europol and Eurojust
in countering money laundering and terrorist financing?
The BBA understands that Europol fulfils a role in
the system of exchange of information between EU authorities on
SARs in countering money laundering and terrorisst financing.
Eurojust's role is to improve cooperation and coordination between
the competent judical authorities of the member States when investigating
and prsosecuting transnational organised crime.
MONITORING IMPLEMENTATION
What EU mechanisms exist for monitoring implementation
of the relevant legislative measures, and what results in terms
of formal compliance and effective implementation have so far
emerged from the use of those measures?
Other than the European Union's general infraction
proceedings, the BBA is unaware of any formal mechanisms for monitoring
implementation of the relevant legislative measures. Under the
umbrella of the European Banking Federation, national trade associations
including the BBA do share information on the status of implementation
of relevant legislative measures in each Member State represented.
Has consideration been given within the EU or
by the FATF to whether the overall results derived from the present
system justify the burdens placed on the private sector?
The BBA is unaware of any such consideration but
would welcome such an exercise.
Are there plans to review the existing EU legislation
or international standards in a manner which would be more sensitive
to the position of the private sector?
The BBA is not aware of any such plans but would
welcome such a development.
Richard CookDirector,
Financial Crime
3 February 2009
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