Understanding Suspicious Activity Reports in UK Law
Suspicious Activity Reports (SARs) are formal reports which are submitted to the UK Financial Intelligence Unit which is situated within the National Crime Agency (NCA). They represent an essential means of alerting law enforcement to suspected money laundering activity, terrorist financing and other criminal activity.
SARs are submitted by financial institutions, accountants, solicitors, estate agents and private individuals where they become aware of or suspect criminal activity. SARs provide an important source of intelligence that would not otherwise be visible to law enforcement agencies relating to suspected economic crime and a wide range of criminal activity.
Once a Suspicious Activity Report has been received, the NCA will conduct an investigation into the suspected criminal activity.
Nazaqat Maqsoom of KANGS comments upon various aspects of Suspicious Activity Reports.
The Importance of Suspicious Activity Reports
In the year 2022-2023, the SARs Annual Statistical Reports reveal that the UK Financial Intelligence Unit received 859,905 SARs and that £272.7m was denied to suspected criminals.
The information provided by SARs has assisted in such ways as:
- locating sex offenders,
- tracing murder suspects,
- identifying criminals involved in trafficking women to work in the sex industry,
- providing banking activity leading to organised crime such as boiler room frauds,
- assisting recovery of proceeds of crime,
- providing detailed information as to the manner in which a particular criminal activity is developing.
Disclosure
Duty to Disclose
Where it is suspected, or as soon as it is known, that money laundering is taking place, there is a legal obligation to submit a Suspicious Activity Report to the NCA.
The threshold for suspicion is low and in the case of R v Da Silva [2006] EWCA Crim1654 it was found to be sufficient to believe that there is a possibility, ‘which is more than fanciful’, that the relevant facts exist. ‘A vague feeling of unease would not suffice.’
Multiple SARs may be submitted on the same issue as and when new information comes to light.
Failure to Disclose
The Proceeds of Crime Act 2002 (‘POCA’) provides:
A person commits an offence if:
- he knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering,
- the information or other matter on which his knowledge or suspicion is based, or which gives reasonable grounds for such knowledge or suspicion, came to him in the course of a business in the regulated sector.
- he can identify the other person suspected or the whereabouts of any of the laundered property, or he believes, or it is reasonable to expect him to believe, that the information or other matter mentioned will or may assist in identifying that other person or the whereabouts of any of the laundered property,
- he does not make the required disclosure to an authorised person as soon as is practicable.
The required disclosure is a disclosure of the:
- identity of the other person, if he knows it,
- whereabouts of the laundered property, so far as he knows it, and
- information or other pertinent matter.
Confidentiality
A Suspicious Activity Report is confidential between the party filing it and NCA for a number of reasons including:
- protection of the person or staff working for the financial institution that submitted the SAR. If discovered, they may face the risk of harm.
- protection of any innocent third party who may be named but has no association with the suspicious activity.
- ensuring detection and prevention of crime is not prejudiced by sensitive information being in the public domain.
- avoiding availability of information which may enable offenders to destroy evidence or disguise the suspicious activity.
As SARs may contain sensitive material, it is an offence to inform an individual that a SAR has been submitted to the NCA. Such a disclosure is known as ‘tipping off.’
POCA provides:
Section 333A Tipping off:
A person commits an offence if:
- any regulated matter is disclosed,
- such disclosure is likely to prejudice any investigation that might be conducted following such disclosure, and
- the information disclosed came to that person in the course of a business in the regulated sector.
The disclosure made by that person or another person was to:
- a constable,
- an officer of Revenue and Customs,
- a nominated officer, or
- a National Crime Agency officer authorised by the Director General of that Agency,
of information that came to that person in the course of a business in the regulated sector.
There are specific exceptions provided by sections:
- 333B (disclosures within an undertaking or group etc),
- 333C (other permitted disclosures between institutions etc), and
- 333D (other permitted disclosures etc).
A person convicted of the s.333A offence of ‘tipping off’ is liable:
- before a Magistrates’ Court - to imprisonment for a term not exceeding three months, a fine not exceeding level 5 on the standard scale, or both;
- in a Crown Court - to imprisonment for a term not exceeding two years, or to a fine, or both.
In addition to a ‘tipping off ‘offence under Section 333A of POCA an individual may also be guilty of an offence under Section 342 of POCA which applies if a person knows or suspects that an appropriate officer is acting, or proposing to act, in connection with a:
- confiscation investigation,
- civil recovery investigation,
- detained cash investigation,
- detained property investigation,
- frozen funds investigation,
- cryptoasset investigation,
- exploitation proceeds investigation or
- money laundering investigation.
The person commits an offence if he:
- makes a disclosure which is likely to prejudice the investigation, or
- falsifies, conceals, destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction or disposal of, documents which are relevant to the investigation.
A person convicted of a s.342 offence is liable:
- before a Magistrates’ Court to imprisonment for a term not exceeding six months, to a fine not exceeding the statutory maximum or both, or
- before a Crown Court to imprisonment for a term not exceeding five years, to a fine or both.
How Can We Assist?
Although there is an obligation to make a report through a Suspicious Activity Report (SAR) in appropriate circumstances, it will be seen from R v Da Silva [2006] EWCA Crim1654, that any suspicion must be ‘more than fanciful’, and the relevant facts exist. We have experienced that clients often feel uneasy about making such allegations, despite not being aware of this legal definition.
The team at KANGS provide comprehensive assistance to both individual and corporate clients concerned about financial conduct that may be criminal in nature, offering advice and guidance.
With extensive expertise gained from representing clients facing allegations related to money laundering, HMRC investigations, and a broad range of white collar crime offences, we are well-equipped to navigate even the most challenging legal matters.
If you are seeking trusted legal guidance in relation to any of the matters outlined above, our team would be pleased to assist you. Contact us using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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