Highlights from The Inspection of Bailiwick Law Enforcement Report

On 2 November 2018 The Inspection of Bailiwick Law Enforcement Report was published. Click here for the full Report. What might the financial services industry learn from that Report?

SARs

Suspicious activity reports (SARs) have increased 103% since 2012, coinciding with re reinvigoration of the Economic Crime Division's (ECD) outreach programme.

Consent, when requested in a SAR, is withheld in about 2% of cases. A review is underway to understand why so few requests are declined. Only 14% are explained by SARs which do not meet the required criteria.

Dissemination of SAR intelligence to local and international authorities remains reasonably steady, occurring in about 70-85% of cases.

THEMIS

SARs provide valuable information but law enforcement may be hampered from making the most of them. The Report describes weak technology as adverse to the ECD's ability to develop the intelligence opportunities SARs provide.

The weakness is THEMIS, the online system through SARs are made, which is identified as an Area for Improvement in need of an upgrade. THEMIS is descried as unreliable, prone to crashes and difficult to export data from.

"We were left with the impression that THEMIS is fit for purpose in only a limited number of respects and that there are some important things it cannot do."

AML Investigations

SAR intelligence is collated and disseminated, but the ECD could not carry out strategic analysis. It could not estimate the full extent of money laundering and terrorist financing in the Bailiwick's financial sector.

Money laundering investigations increased recently, after a fall in 2013. But in 2017 they were no higher than in 2012.

The report raised Moneyval's 2015 observation that AML investigations and convictions are low. There have only been 4 prosecutions and 3 convictions since that 2015 report. This low number was in part attributed to ECD capacity and expertise limitations.

Financial Orders

Production orders, account monitoring orders and customer information orders were mentioned. These orders cannot be sought without H M Procureur's approval. The seeking of these orders raised a particular concern:

"Very lengthy delays were commonplace. This frustrated investigators, seriously limited the rate at which investigations could progress, and had an adverse effect on asset recovery performance. We also found that delays with international mutual legal assistance cases were commonplace."

ICART

The International Co-operation and Asset Recovery Team (ICART) were described as having a new role: pursuing suspected criminal assets frozen by restraint orders or where consent to transact has been declined. There are apparently significant assets to explore, with ICART having started civil forfeiture cases linked to over £200 million of assets.

Key Lessons

Following the Report, we may well see:

• • A THEMIS upgrade, allowing the ongoing contributions made by the financial service industry raising SARs to be put to better use.
• • Ongoing pressure on law enforcement to secure more AML convictions.
• • A continuing increase in financial orders, both due to encouragement to reduce delays and ICART's new role.

A THEMIS upgrade funded from seized proceeds of crime might be a possibility?