My Lords, this draft statutory instrument raises the existing threshold in the Proceeds of Crime Act 2002 below which certain businesses in the anti-money laundering regulated sector do not need to submit defence against money laundering suspicious activity reports, known as DAMLs. The amount is being raised from £250 to £1,000. This aims to increase the efficiency and effectiveness of the DAML regime for law enforcement, businesses and customers.
A DAML is submitted to the National Crime Agency by a person proposing to deal with suspected criminal property that may make them liable for one of the principal money laundering offences under the Proceeds of Crime Act 2002. By submitting a DAML, a person can avoid criminal liability by obtaining consent or deemed consent for the act they propose to carry out; for example, a customer’s transaction to pay their rent. The DAML provides intelligence to the National Crime Agency and effectively freezes a transaction until it gives a consent decision or seven working days pass, after which businesses can assume that they have the relevant consent.
Raising the threshold to £1,000 is required now because the volume of DAMLs is rising and the vast majority do not provide law enforcement with asset
seizure opportunities. Instead, they place regulatory burdens on businesses to submit and burdens on law enforcement to review, and cause a delay to customers, who must often wait seven days for their transaction to process.
To put the volumes in perspective, between 2018-19 and 2019-20 they increased by 80%, from 34,543 to 62,341. They then increased by, by my calculations, a further 41% to approximately 105,000 in 2020-21. In 2019-20, only 2% of all DAMLs, equivalent to 1,365, were refused consent by the National Crime Agency. Of those, only 1,062 progressed to law enforcement pursuing asset denial. The threshold applies to transactions in the operation of an account which do not relate to the opening or closing of an account. It applies only to deposit-taking bodies—in essence, banks and building societies—and to electronic money and payment institutions. This uplift in the threshold will result in fewer delayed transactions for businesses and customers where a DAML is no longer needed. It will allow businesses to prioritise their resources towards intelligence-led investigations and will enable law enforcement to focus on higher-priority reports that provide opportunities for asset seizure and disruption of criminal activity.
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The figure of £1,000 has been chosen bearing in mind that this is the minimum amount for law enforcement to pursue an account freezing order under the civil recovery provisions to investigate and pursue asset denial. To prevent the loss of intelligence, businesses must still submit an intelligence-only suspicious activity report to the National Crime Agency where they suspect money laundering. However, this does not require them to wait for consent to proceed.
This statutory instrument forms part of a package of reforms to the DAML regime within the Economic Crime and Corporate Transparency Bill currently in the other place. I therefore commend this motion to the Committee. I beg to move.