Making a quality Suspicious Activity Report

Making a quality Suspicious Activity Report

The Institute of Financial Accountants outlines how, why and when to make a quality Suspicious Activity Report

Making a quality Suspicious Activity Report

Suspicious Activity Reports (SARs) should be submitted to the UK Financial Intelligence Unit (UKFIU) to provide intelligence if you know, suspect, or have reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting, money laundering or terrorist financing. It is estimated that £90bn of criminal proceeds are laundered each year.

SAR intelligence has been instrumental in preventing and disrupting crimes such as drug and human trafficking and child exploitation, informing strategic threat assessments and providing intelligence that may be of help at some point in the future. However, for SARs to be of value they need to include as much relevant information as possible.

We’ve asked the Institute of Financial Accountants for advice on how to submit a good quality SAR.

Making a good report

SARs should be submitted online via the National Crime Agency (NCA) website. Helpfully, there is a template for the Accountancy sector, but you ultimately need to cover the what, who, why, when, how, and where of the crime, while keeping it as succinct as possible.

Delivering a quality report includes:

  • Being clear and concise: be succinct, logical, and avoid jargon and acronyms. The person reading your report may not be familiar with the sector you are reporting, so getting to the point is helpful.
  • Providing the right information in the right way: as well as keeping your formatting clear and simple, follow the NCA guidance and standards, including:
    • Subject type: classify each subject mentioned in the report as a suspect, victim or unknown. This helps classify their role within the context of the report and places emphasis on those suspected of conducting criminal activities.
    • Details – individuals: where possible provide any middle names, date of birth (especially helpful), addresses (including postcodes where known), email addresses, web page addresses, and any other known identifiers such as National Insurance number, passport number, car registration or phone numbers.
    • Details – entities: wherever possible include the registration number, (tax reference and VAT number is also useful), country of incorporation, addresses (including postcodes where known), email and web addresses, phone numbers and wherever possible the full legal name and designation, e.g. Limited, SA, GmbH etc.
    • Financial transactions: when the suspicion relates to a financial transaction, include details of the beneficiary/remitter of funds, bank account details, transaction date and transaction type e.g. credit card, cash etc., and explain the reason why any of the transactions are suspicious.
    • Services provided: provide details of the types of services being provided at the time the suspicion arose e.g. audit, assurance, company formation, tax etc. and include date of activity, how the activity will take place and where known, full identity of the parties involved as well as indicators suggesting complicit criminal behaviour or negligent behaviour of the professional(s) involved.
    • Reason for suspicion: keep your explanation clear, concise and in plain English and focus on what you have seen and why it is unusual or suspicious. Where you feel able to, refer to which predicate offences (i.e. the underlying criminal conduct giving rise to the money laundering) you think may have been committed.
  • Use glossary codes to support law enforcement agencies to make use of the SAR. You can find the most appropriate codes here.

It is essential to remember that tipping off is illegal. Tipping off relates to disclosing SAR information outside your organisation that may prejudice the investigation by law enforcement.

Playing your part

For accountants engaged in public practice, Suspicious Activity Reports are enshrined as part of your mandated responsibilities in The Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017, as amended in 2019. It helps to protect your business from the risk of laundering the proceeds of crime, and submitted evidence is kept confidential.

SARs present a key opportunity for accountants to take an active role in the detection and prevention of economic crimes. The reports are used by UKFIU, which is part of the NCA, to help identify serious organised crime threats and forms of fraud, as well as supporting HMRC to mitigate tax and illicit financing risks. Accountants must be alert for potential money laundering, as defined in part 7 of the Proceeds of Crime Act 2022, or terrorist financing, as set out in part 3 of the Terrorism Act 2000.

Within your organisation, you should have a nominated person for submitting SARs, or a Money Laundering Reporting Officer (MLRO). You should also support your wider team with training on how to identify potential risks, what information is required to make a submission, and when they should approach your MLRO.

When to make an SAR?

The key when determining whether you should submit an SAR is to establish whether there is knowledge, suspicion, or reasonable grounds for knowing or suspecting money laundering or terrorist financing. The tricky part is suspicion, which is defined as when “you think there’s a possibility, which is more than fanciful, that the relevant fact exists”. A “vague feeling of unease” will not suffice.

The MLRO, must then take a view as to whether an SAR should be submitted to the NCA. It is reasonable for your MLRO to ask questions about the concerns being raised, and to review relevant information and collected evidence to support their judgement. Due diligence is of course a requirement, but the burden for an investigation falls to the UKFIU once a report has been submitted and there is no requirement for your MLRO to undertake an extensive investigation themselves.

The MLRO should not submit a SAR to the NCA if:

  • the identity of the person suspected of laundering money or terrorist financing is not known; or
  • the information the reporter holds would not help to identify the launderer or the whereabouts of the criminal property; or
  • there is no information that may assist in identifying the launderer or the whereabouts of the criminal property.

One final point, the SAR regime is not a route to report crime or matters posing an immediate risk to others, and there may be a need to make reports to other authorities.

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