Suspicious Activity Reports (SARs) – Key Issues to Consider
1.
Each employee has a personal obligation to report suspicious
activities or where there are reasonable ground for suspicion of
money laundering or terrorist financing, not simply the senior
member in practice (MiP) or the head of the practice.
2.
In the UK, the key reporting requirements are found in
section 330 of the Proceed of Crime Act 2002 (POCA),
once all three conditions are met:
a)
b)
c)
You should not undertake the work related to the services
concerned until express or implied consent is received from NCA
in accordance with section 335 and 336 POCA.
10.
If you have made a SAR then you must take care not to enter into
correspondence or discussion with the suspected client for fear
of committing the Tipping-Off offence. The CCAB advises against
lying to clients as to why there is a delay in providing services
however you should simply state that you are unable to discuss the
delay at this time.
if you know or suspect, or have reasonable grounds for
knowing or suspecting, that some person is engaged in
money laundering;
11.
if the information on which you base your knowledge or
suspicion has come to you in the course of your business
(which will be, in the case of a practising accountant, your
work in providing accountancy services by way of business)
and;
12.
if either a) you can identify the person who you think may
be engaged in money laundering or can provide information
concerning the whereabouts of the laundered property or
13.
b) you believe that the information you have may assist in
the identification of the person engaged in the laundering
the whereabouts of the laundered property.
3.
Accountants have difficulty providing sufficient information and
detail on who the report is about, the basis for suspicion, their
lack of understanding around requesting consent and accountants
failing to be contactable for additional information.
4.
The most efficient and practical way of submitting a SAR is online
through the NCA website if in the UK or if overseas through your
country’s Financial Intelligence Unit website. Reports should be
made as soon as you become suspicious, or as soon as is
reasonably practicable. A suspicion is considered to be ‘’a positive
feeling of actual apprehension or mistrust amounting to a slight
opinion, but without sufficient evidence’’.
5.
9.
Reports should be made internally to the Money Laundering
Reporting Officer if there is a MLRO appointed. You would then
have discharged your personal duty and the MLRO then has
responsibility to assess the report and decide if a SAR to the
authorities must be made.
The MLRO should have undergone additional more specialist
training particularly around the issue of analysing suspicions and
deciding whether to report externally or if consent is required.
6.
The content of the SAR should include: full background information on
the identity of the suspect; information or details on which the
suspicion or knowledge of the money laundering is based; the
whereabouts of the illicit property if known. The HM Treasury state
that in a large percentage of SARs submitted, accountants fail to
give a clear and specific reason for suspicion and more a higher
percentage of SAR reporters fail to make it clear what services
they are actually providing/proposing when their suspicion arose.
You may refer to the CCAB Guidance, para. 7.6, for additional
information on what should be included. Without these it is difficult
for law enforcement to provide consent to act if you have
requested them to do so.
7.
You may work for a client after submitting a SAR on that client to
the NCA. However you or your MLRO will also need to consider
whether continuing to act for the client in respect of the activities
covered by the SAR would result in you committing a money
laundering offence (sections 327-329 POCA).
8.
If you are about to provide a service to a client and you suspect
it would amount to a ML/TF offence or while doing a prohibited act
provided the accountant did not realise so at the outset and
reported as soon as possible following knowledge or suspicion of
ML; or after the prohibited act is done provided there was good
reason for not reporting beforehand, then you may need to make
an authorised disclosure under s.338 of POCA.
You will be exempt from making a report where your knowledge or
suspicion comes to you from privileged circumstances provided the
information received is not with the intention of furthering a crime
(section 330 POCA).
Examples of Privileged circumstances are outlined in the CCAB
Guidance para. 7.36.
You may not get a response following the submission of the SAR,
however it is a crucial piece of information helping Law Enforcement
Agencies and the National Crime Agency to build up a wider picture to
help fight organised crime.
The NCA receive thousands of SARs each year which are fed into
their bulk data systems for analysis. Please do not think that because
you have not received a response from them that your SAR is not
required or being considered. You are obliged to continue to submit
any SARs when you know or suspect ML/TF offences.
Red flag indictors - Suspicious transactions that might be
reportable could include:






Client reluctant to provide identification
information or unwilling to meet in person
Unexplained payments or business activity
conducted without obvious reason
Overly complex business structure where less
complicated one could be used
Sudden and unexplained change in activity or
income of a cash business after a change in
ownership.
Client banking is done (or account held) outside
of the business area without a convincing reason
A client insists on running business as cashintensive where cheques or electronic transfers
would be more efficient or more appropriate