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Your financial transactions are far from private

Uk-money There is an extremely large database of private information – banking transactions – accessible to a wide number of bureaucrats and public servants across the country.  Once you're on it, your data is on there for 10 years – and you won't be able to find out if you're on it or not, as it's exempt from FOI.  It's the anti-money-laundering database.

Lord Jopling explained this in the House of Lords this week.  It is a relatively complex issue, so I reproduce a fair chunk of his speech to give context but have bolded what I think is the central bit:

The reporting of suspicious activities by the private sector to law enforcement bodies is the keystone of the fight against terrorism. It follows recommendations made by FATF [Financial Action Task Force], but those are only recommendations. They acquire the force of law throughout the EU by being incorporated in the third money-laundering directive. Effect is given to the directive in the United Kingdom by the Money Laundering Regulations 2007. It is under these regulations that banks, other financial institutions, lawyers, accountants, auditors, insurers, estate agents and many others are required to report to the Serious Organised Crime Agency any transaction or activity that seems to involve funds that are the proceeds of criminal activity. Knowledge to do that is unnecessary. The bankers explained to us that this is a suspicion-based regime – if you smell a rat, you must report it. In 2007-08 the banks alone smelt and reported 145,000 rats, of which 838 related specifically to terrorist financing.

We did not question the utility of this; it is central to the fight against money-laundering. But given the immense burden of the regime on the private sector, we questioned whether the regime should apply where the underlying criminal offence is minor or even trivial. Some of our witnesses, especially the Law Society, agreed with us. We recommended that the Proceeds of Crime Act 2002 should be amended to exclude minor offences. The Government, in a response that I commend for its careful consideration of our recommendations and, to be fair, its full response to them, explained at length why an all-crimes approach should be retained. They pointed out that there may be little correlation between the sums laundered and the seriousness of an offence, that an activity may be suspicious irrespective of value and that something that the reporting institution may regard as trivial may look very different to SOCA when considered with other intelligence.

I am disappointed that the Government cannot accept our recommendation. But, if not, it is all the more important that they should act on our other recommendations: to consult more fully with the private sector and to give greater feedback on the utility of all their work and its outcome. The Government accepted this and listed some of the many ways in which they currently provide feedback. This seems to concentrate mainly on the top reporters and on first-time reporters. More could be done with those, such as small and medium-sized firms of solicitors, for whom the reporting regime is a real burden to which they object strongly. They need to be persuaded that their contributions are of real value.

Suspicious activity reports, or SARs, are entered by SOCA on to ELMER-I am sorry for all the acronyms-which is, in effect, a database of suspects. Given the number of reports, it is a very large database. As one might expect, access to it is available to police forces and others responsible for prosecuting serious crime. One might not have expected the information also to be available to trading standards authorities or, as the noble Lord, Lord West of Spithead, explained in a Written Answer to my noble friend Lord Marlesford, who is in his place, to Nottinghamshire County Council, which wanted to use the database to investigate housing benefit fraud. This seemed to us to be an unwarranted use of information collected for a different purpose. We pointed out to the Government that the FATF recommendations do not require this information to be made use of other than in connection with serious crimes; nor does the money-laundering directive, which gives these recommendations the force of law, require that. "True", say the Government, but they do not prohibit it, either. Since the Government maintain the all-crimes approach for SARs, it seems that they will continue to allow the data to be used even in connection with offences that could not by any stretch of the imagination be called serious.

We read a great deal these days about the iniquities of the DNA of persons who have never been charged with a criminal offence being retained on the DNA database, but I wonder how many people know that the details of their banking transactions may be retained on a database not because they are connected with a crime that has been committed but because a bank employee-perhaps a lowly employee on the salary scale-has a hunch that a transaction may be related to a suspicious activity. No steps are taken to confirm whether the suspicion is well founded, details of the transaction are retained for at least 10 years and anyone who wants to peruse the transactions relating to him on the database is unlikely to succeed, since SOCA is exempt from the Freedom of Information Act. As I said, these entries can be accessed by a wide range of bodies for purposes wholly unconnected with serious crime.

The committee does not believe that this situation can continue. We recommended that the Information Commissioner should review and report on the operation and use of the ELMER database. The Government tell us that SOCA has invited the Information Commissioner to discuss this. The deputy Information Commissioner wrote to me on 5 October to say that he had made an initial approach to SOCA to discuss how he might carry out that review. That was two months ago-time for the bankers to have reported a further 2,500 suspicious transactions. Has that meeting taken place? Has the review begun? What progress has been made? Where is all this leading?

All questions Big Brother Watch would wish to ask, too.  In his response on behalf of the Government, Lord Brett singularly failed to answer them.

By Alex Deane

Posted on by Big Brother Watch Posted in Databases

5 Responses to Your financial transactions are far from private

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    We recommended that the Proceeds of Crime Act 2002 should be amended to exclude minor offences. The Government, in a response that I commend for its careful consideration of our recommendations and, to be fair,

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    data to be used even in connection with offences that could not by any stretch of the imagination be called serious.

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    I use the internet to pay bills and do most purchases with Visa Debit card. Once, an unauthorized charge was made on a recurring type billing. I went to the bank and they gave me a form and I entered who it was and signed a statement that it was unauthorized. They immediately reversed the charge. It was very easy. Card charges are just like checks–you can “bounce” them easily. My bank would never hesitate to do this for customers, the matter is left between the seller and buyer to figure out.

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    I entered who it was and signed a statement that it was unauthorized.

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    It was very easy. Card charges are just like checks–you can “bounce” them easily. My bank would never hesitate to do this for customers, the matter is left between the seller and buyer to figure out.

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