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Suspicious transaction reports to FCA soar to record high

The number of reports notifying the UK's Financial Conduct Authority (FCA) of suspicious transactions have risen to their highest ever level, more than doubling in the last two years.23 Oct 2017

According to a recent Freedom of Information (FOI) request, the FCA has received 3,730 suspicious transaction reports (STRs) for 2017 to date – a 24% rise on 3,008 in the whole of 2016, and more than double the number received in 2015. 

The hike in reports follows the introduction of the EU's Market Abuse Regulation in July 2016. The regulation introduced more disclosure requirements to the financial services sector and in the UK built on the existing market abuse regime. 

Firms that become aware of suspicious transactions or orders, where there are reasonable grounds to suspect it may be insider dealing or another prohibited behaviour that may constitute market abuse, must submit a suspicious transaction and order report or an STR to the FCA. 

STRs have been growing in number for the past few years. In 2014 figures obtained by Pinsent Masons, the law firm behind Out-Law.com, showed a 28% increase in STRs since the establishment of the FCA in 2013, compared to those reports received by predecessor body the Financial Services Authority. The latest FOI figures from the FCA show STRs have risen from 1,308 in 2013. 

Meanwhile figures obtained by Pinsent Masons last year showed there was a 175% hike in the number of criminal investigations into insider dealing between 2015 and 2016. STRs are often connected to insider dealing. 

Financial services regulation expert Michael Ruck of Pinsent Masons, the law firm behind Out-Law.com, said last year the FCA had been reviewing its systems and controls to identify all forms of market abuse.

“This focus has led to a greater increase in the number of investigations into insider dealing. With new sentencing guidelines put in place in 2015, it is inevitable that financial penalties for firms will also increase,” Ruck said.