Although well understood to those working within the financial services sector, it is important for other regulated and unregulated sectors to have an understanding of money laundering and in particular, raising suspicions of this criminal activity.
What are SARs?
Under Part 7 of POCA, a person in a regulated sector is required to make a disclosure if they know or suspect, or have reasonable grounds for knowing or suspecting, that another person has engaged in money laundering.
In practical terms, SARs are the disclosures that are made to a nominated officer or law enforcement, usually the National Crime Authority (NCA), in compliance with the obligations imposed under POCA.
The term “Suspicion”
If you have knowledge or a suspicion that a person is engaged in money laundering, you must submit a SAR.
However what constitutes a “suspicion”? Unfortunately, the term is not defined in the relevant legislation but when considering whether a suspicion has been formed, guidance can taken from the Court of Appeal case of R v Da Silva [2006] EWCA Crim 1654. In that case, the Court held that a suspicion is “… a possibility, which is more than fanciful, that the relevant facts exist”. Therefore the threshold for suspicion is considered to be relatively low.
Who can submit SARs?
Generally speaking, SARs can be made by persons in a regulated sector, financial institutions and private individuals.
It is worth noting that even persons not in a regulated sector may be obliged to submit a SAR if they know of or suspect money laundering may be taking place.
How to submit SARs?
The NCA has a online platform whereby you can make a SAR electronically. The platform is available at all times (24/7), is free and generates an acknowledgement and reference numbers. Typically, reports submitted on the platform are processed quicker than manual reports.
You can also download the relevant forms from the NCA website and submit a manual report.
Confidentiality
All SARs submitted to the NCA are held on a secure database and access to the database is strictly limited.
The NCA considers the confidentiality of SARs to be the cornerstone of the reporting regime and there are specific guidelines to protect the confidentiality of SARs.
What information should be included?
The online platform and the NCA forms have information fields that need to be completed. Providing the NCA with as much information and detail as possible will assist the NCA in their assessment. Further, it is important to be comprehensive when describing the reasoning behind your suspicion.
What do I do after I make a submission?
You must not tell the individual that is the subject of the SAR that you have made a report. If you do, that can negatively impact any assessment or investigation and you may have committed a criminal offence under POCA, namely the offence of “tipping off”.
If any further information emerges, you can file a new SAR and you should include the previous SAR reference numbers.
SARs are analysed by the UK Financial Intelligence Unit within the NCA and investigated further where appropriate. However as a result of the volume of SARs submitted each year, the NCA does not provide feedback to each and every SAR.
Failure to submit SARs
Under POCA, it may be an offence if you fail to make a SAR despite having knowledge or a suspicion of money laundering. It is possible to be criminally prosecuted under POCA and/or face regulatory action. If convicted, the penalties are a fine or imprisonment (or both).
The SARs regime
SARs provide the NCA with valuable intelligence and puts the NCA on notice of various potential misconduct, including instances of money laundering. The regime forms an important part of the UK’s fight against financial crime.
For more information about money laundering, SARS, POCA in relation to financial crime compliance obligations please contact the author: Kirthi Kalyan
Should you suspect that you are a victim of fraud or other wrongdoing and need advice, please do not hesitate to get in touch at hello@tenetlaw.co.uk we will be happy to help.
