Transaction reporting is the detailing of each major currency exchange, withdrawal, transfer or payment made by, to or through a financial institution.
Why financial reporting is necessary
Increasing regulation and legislation surrounding every financial interaction means that the British government and European Union have a pressing need to monitor financial firms with greater stringency to ensure that all of their financial practices are undertaken in line with regulations.
Under EU law, financial reporting is compulsory to ensure governing bodies and governments can monitor financial transactions for money laundering, tax evasion and other criminal offences that might be practiced within financial firms. Of course, financial firms themselves also take a strong interest in the details of their financial transaction reports. The details of such reports provide those in charge of a firm with a clear insight into its dealings, incomes, expenditures and monetary operations. Fail to provide a financial transaction report or neglect to follow its regulations and you risk committing a criminal offence that could lead to a fine, imprisonment – or both.
Who compiles transaction reports?
All MiFID eligible securities need to be reported to a Approved Reporting Mechanism (ARM), such as UnaVista, who will in turn report this to the relevant country’s competent authority. Data should be validated against the latest sources, so that errors on under – or over-reporting are spotted.
Who do firms send transaction reports to?
Transaction reports were previously sent to the Financial Services Authority (FSA). However, this responsibility has now moved following the division of the FSA into two separate regulatory authorities: the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Banks, credit unions, insurers, major investment firms and building societies should therefore now send their transaction reports to the PRA.
The Transaction Monitoring Unit (TMU) is responsible for the collection of transaction reports in the UK, and it is their task to monitor firms’ compliance with transaction reporting regulations. They are also tasked with the surveillance of UK markets.