Suspicious activity reports by staff at financial firms exceeded one million during 2019-20

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Suspicious activity reports by staff at financial firms exceeded one million during 2019-20

Suspicious activity reports submitted by staff at financial firms, have been steadily increasing in number year-on-year since 2017, according to data from the FCA.

The regulator's report Financial Crime: analysis of firms' 2017-2020 has revealed that staff have increasingly been reporting suspicious occurrences involving illicit financial activity to internal staff and to external regulators.

Reports have risen from 887,500 in the 2017-18, to 934,136 in 2018-19, and again to 1,028,260 in the year 2019-20, reflecting a 16% increase overall during the period 2017-18 - 2019-20.

The report, which compared crime data from over 2,300 firms over the course of the three years, also revealed that the retail banking sector accounted for 78% of staff concerns reported internally and 85% of those submitted externally to the NCA.

"Money laundering and other forms of financial crime present major challenges for banks, and this is an issue which has only been buoyed by the advent of widespread remote working and online banking systems. It is therefore absolutely essential that firms work closely with the FCA to openly and honestly report signs of illicit activity and work with them to take appropriate actions," said Wayne Johnson, CEO and co-founder of security software company Encompass Corporation.

The retail lending sector accounted for the second highest number of internal complaints, at 204,374, compared to 804,105 from the retail banking sector.

The third highest sector was wholesale financial markets, which had just 12,062 reports.

In addition, the wholesale financial markets sector reported having the most politically exposed persons (PEPs) as customers over the three years, at 116,937, closely followed by retail banking.

PEPs often present a higher risk of involvement in money laundering because of the position they hold.

"For the majority of financial services firms, managing complex know your customer (KYC) and anti-money laundering (AML) programmes can be a hugely challenging task, costing time and resources," said Johnson.

"Key to this effort requires investment in the necessary automated regulation technology to run due diligence on demand, collate critical documents and flag up potentially suspicious transactions, helping banks operate with reduced administrative overheads," he added.

A 2021 report from UK Finance revealed that in the first half of the year, criminals stole a total of £753.9m through fraud, an increase of 30% compared to H1 2020.