When Tony Blair set up the Serious Organised Crime Agency back in April, the new crime-fighting body was hailed as the answer to the ever more sophisticated character of organised crime.

One of the principal weapons included in SOCA’s crime-fighting arsenal at its inception was the legal obligation that was placed on accountants, lawyers, independent financial advisers and bankers to report any suspicious financial activity by clients to SOCA.

These suspicious activity reports (SARs) have formed the cornerstone of the government’s battle against financial and organised crime. In 2005 SOCA’s predecessor, the National Criminal Intelligence Service (NCIS), received 200,000 suspicious activity reports. Of these reports, 40,000 opened up a new area of interest for HMRC investigators.

Given the importance of SARs in SOCA’s work, the organisation will surely have been alarmed to learn that some accountants were becoming reticent to file reports because they feared that their identities would be released to the suspects they reported.

At least one accountant who made a suspicious activity report has had his details disclosed to a suspect ahead of a court case, and there have been several other anecdotal reports of similar disclosures.

These disclosures have placed accountants in a very awkward position, where complying with the law could place them at risk if their identities are disclosed to suspects at a later date.

It is an issue that the ICAEW, the Association of British Insurers and the Law Society have been urgently discussing with the authorities through the Treasury’s Money Laundering Advisory Committee.

In a technical briefing on SARs released last week, the ICAEW said that it had been encouraged by work SOCA had done to ensure that accountants were protected, but acknowledged that the matter was a ‘continuing concern’ for members and office holders, who were ‘undoubtedly justified’ in voicing their fears.

In the current environment it is legally possible for SARs to find their way into the hands of suspects, although this occurs only when such disclosure is required by law for the fair administration of justice.

The major concern for accountants, however, is that SARs could be leaked by corrupt officials, through an administrative error or by a law enforcement authority that has not signed up to confidentiality guidance issued by SOCA and the Home Office. There is no suggestion that any cases so far have involved corrupt officials.

Lobbyists have been particularly focused on making it a statutory requirement for all end-users of SARs to comply with confidentiality rules. There has been at least one report of a government agency investigator revealing an accountant’s identity to a suspect client during a questioning session.

So far the ABI, ICAEW and the Law Society have been unsuccessful in their attempts to secure legislation for this purpose, but have vowed to continue lobbying for some kind of statutory protection for accountants and other professionals.

The campaigners will also continue pushing for the tightening up of rules and penalties for administrative errors – one of the major areas where SAR details can be leaked.

It is a campaign that SOCA and other crime-fighting agencies would do well to take note of.

It is, after all, in SOCA’s interest to keep accountants on side, as nothing will dry up the filing of SARs faster than a lack of confidence in the agency’s ability to protect those it is relying on for tip-offs, which are the lifeblood of so many case leads.

SOCA plays a vital role in the fight against the scourge of financial crime, and accountants have a vital responsibility to do all they can to help it. But if this relationship is to be effective, accountants need to be able to make suspicious activity reports without worrying about confidentiality and their personal safety.

FACTS/FIGURES

200,000
The number of suspicious activity reports filed in 2005

£185m
The value of criminal assets recovered over the last three years

50,000
The number of new tax inquiries triggered by SARs