The number of suspicious financial transactions reported in the Isle of Man dropped in 2016/17, it has been revealed.

There were 1,536 so-called ’suspicious activity reports’ (SARs) from April 2016-2017, compared with 1,795 in 2015/2016.

It equates to a 14% drop.

The figures are contained within the first annual report of the Financial Intelligence Unit.

It says the drop is ’considered to be as a result of improved engagement with industry, resulting in fewer, but better quality SARs, as demonstrated by the number of intelligence packages disseminated to local law enforcement’.

Most SARs are made under the Proceeds of Crime Act of 2008. But 12 were made under the Anti-Terrorism and Crime Act 2003. This represented a four-fold increase on the 2015/16 figure of three.

’This is considered to be due to a greater industry awareness of terrorist financing and its indicators,’ the report suggests.

The Proceeds of Crime Act also allows people to ’avail themselves of a defence against money laundering charges by seeking the consent of the FIU to conduct a transaction or undertake other activity about which they have concerns’.

If no link to criminality is found, the FIU will grant consent.

’Where consent is refused, the person will not proceed with the transaction or activity, for fear of committing a money laundering offence, and the relevant law enforcement agency is able to seek the restraint, seizure or freezing of the relevant funds to prevent their movement.

A total of £3,021,013 was ’restrained’ during 2016/17. That broke down to £66,673 classed as domestic and £2,954,340 as international. No cash was actually seized.

Banking was the largest reporting sector when it came to SARs, with 57.75% of all reports received. The online/egaming sector was next highest, with 17.51%.

’These figures are reflective of both the nature and relevant size of business undertaken in the Isle of Man,’ says the report.

It adds: ’The main known or suspected criminality identified by the online/egaming sector was fraud/attempted fraud, or money laundering with a predicate offence of fraud, with the fraud being perpetrated or attempted against the online/egaming company.

’The suspicion generally arose due to fraudulent documents being submitted to the online/egaming company or activities relating to chip dumping, where a stolen credit card or stolen ID is used to fund gaming, involving one or more players intentionally "losing" to another player, in order to obtain financial benefit.’

Money laundering accounted for 35% cent of suspected criminality in SARs cases, with tax evasion next on 26%.

In terms of the SARs received in 2016/17, they related to residents in 105 jurisdictions, most subjects being in the Isle of Man or the UK.

The FIU was established as a statutory body in 2016, with staff transferring from the police financial crime unit.

In the past year, the government has introduced legislation to ensure the Isle of Man meets its obligations under Moneyval, the Council of Europe body set up to evaluate anti-money laundering measures and terrorism finances. It said, in a report last year, that the Isle of Man needed to up its game.

It is due to review the island’s progress in April.

FIU board chairman, Attorney General John Quinn, says in his foreword to the report: ’The FIU and the FIU board are committed to make the improvements required, in order that the FIU may play its role in pro-actively combatting global financial crime and both terrorist and proliferation financing and protecting the island’s future.’