Reports of suspicious transaction up 24% last year

27 Mar 2015 | 03:46 pm | 1 min. read

370% increase in suspicious transaction reporting since 2008 The number of suspicious transactions reported to the financial services watchdog has shot up by 24% last year, according to international law firm Pinsent Masons.

Data obtained from the Financial Conduct Authority shows that the number of suspicious transaction reports – often associated with suspected insider dealing – has increased from 1308 in 2013 to 1626 in 2014. The figures also show that there has been a 370% rise in suspicious transactions since the start of the financial crisis in 2008.

Reports of 'Misuse of information', the most frequently reported abuse, also rose 24% last year, from 1164 reports in 2013 to 1451 reports in 2014.  The FCA has seen a 424% increase in this type of suspicious transaction report since the start of the financial crisis in 2008. 

A suspicious transaction is one in which there are reasonable grounds to suspect activities might constitute market abuse, such as insider dealing or market manipulation. It has been a requirement of the Market Abuse Directive (MAD) since 2005 that firms seeing suspicious transactions must report these to the FCA so that it can review these and other similar transactions for evidence of market abuse.

Michael Ruck, a Senior FS Enforcement Lawyer in the Financial Regulation team at Pinsent Masons says:

"The fact that STRs are on the rise doesn't necessarily mean that there is more wrong doing in the City, rather it suggest that regulated firms and staff have become better at identifying and reporting suspicious activity."

"Over the past two years, the FCA has significantly increased its focus on STRs. The FCA has carried out – and continues to carry out – supervisory visits to firms to more closely review the systems and controls in place to identify suspicious transactions. This focus has led to a substantial increase in the number of STR reports the FCA has received."

"There is a heightened awareness that turning a blind eye to suspicious activity is no longer acceptable. Personal accountability, the threat of hefty fines and negative publicity is putting pressure on regulated firms and individuals to report suspicious transactions."

"In many organisations the FCA's 'credible deterrence' drive has spawned a culture of 'if in doubt submit a STR report'.  Whilst firms are often keen to do the right thing, there is also clear motivation for firms and individuals to cover their backs due to the fear of fines, criminal prosecutions and bans now running deep." 

Suspicious Transaction Reports  

Year

Distortion / Manipulation

False / Misleading

Misuse of Information

Total STRs

2007

15

5

308

328

2008

62

7

277

346

2009

56

9

313

378

2010

67

8

434

509

2011

66

19

499

584

2012

77

21

920

1018

2013

138

6

1164

1308

2014

162

13

1451

1626

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