Doing your duty could put you in danger

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

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

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.


The number of suspicious activity reports filed in 2005

The value of criminal assets recovered over the last three years

The number of new tax inquiries triggered by SARs

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