Submitting effective Suspicious Activity Reports

Submitting effective Suspicious Activity Reports 

A Suspicious Activity Report (SAR) is a disclosure made to the National Crime Agency about suspected money laundering or terrorist financing activities. Most SAR submissions are made by firms regulated by the Financial Conduct Authority, of which there are 50,000 in the UK. These companies provide financial products and services to both UK and international customers[1] and include banks, building societies, insurers, investment firms and credit unions, all of which can be prime targets for money launderers.   

Law enforcement cannot tackle the enormous problem of money laundering by themselves - they need assistance from institutions that may be targeted. The Suspicious Activity Report system is crucial in stamping out money laundering from our financial system and organisations should submit reports as frequently as necessary. Even private citizens can submit reports if they suspect something is amiss.

It’s worrying to see the total number of reports increasing year on year. However, this increase does indicate that industries and perhaps individuals are becoming savvier to this type of illegal activity and are reporting it accordingly. There are lots of ways in which businesses can protect themselves from fraudulent activity and it’s important that this remains high on business leaders’ agendas in 2020.

Between April 2018 and March 2019, 478,437 SARs were submitted in the UK. Greater detail on the industries submitting the most reports can be seen below:

1. Banks
   
   

Perhaps unsurprisingly, banks are the number one target for money launderers and so they top the list by some margin in the total number of SARs submitted. 

1. Building Societies
   
   

With similar structures to banks, the 43 building societies in the UK are also at high risk for exploitation by money launderers and terrorist financiers. 

1. Money Transmissions Services
   
   

Money transmission services process vast amounts of money, which criminals can try and infiltrate with their dirty money.

Below are some important tips for submitting effective SARs:

Who should submit a SAR?

Money Laundering Reporting Officers (MLRO), or their deputies, are responsible for sharing appropriate information with the National Crime Agency if they become suspicious of money laundering or terrorist financing. This information is submitted in the form of a Suspicious Activity Report. 

All businesses regulated by the Money Laundering Regulations must appoint a person within their organisations an MLRO[3]. These people should be honest, moral and of relatively high authority in a company, so that they can access the data they need to carry out their duties, including identifying and reporting possible instances of money laundering and terrorist financing.  

When should a SAR be submitted?

If you’re a Money Laundering Reporting Officer in the regulated sector, you are obliged to submit a SAR as soon as you know or suspect (or have reasonable grounds for knowing or suspecting) that a person/entity is involved with money laundering or terrorist financing. 

An example of a situation leading to a Suspicious Activity Report may be as follows: Mr Bloggs has held an account at ABC123 Building Society for eight years. He deposits his normal salary of £2,500 into his account every month and has innocuous outgoings such as mortgage payments, car costs and eating out. Suddenly, Mr. Bloggs starts receiving £4,500 transfers into his account, which is withdrawn as cash from an out-of-town ATM soon after the deposit. This is highly unusual account activity and may be considered suspicious.

How can you submit an effective SAR?

Ensuring you provide the National Crime Agency with a fully detailed and effective report is essential to converting your suspicions into actionable intelligence that can move towards preventing crimes.

Use the correct subject classifications, such as ‘victim’ or ‘unknown’, to make it clear who’s who in your report, as this can avoid any potential confusion for law enforcement. Remember that the NCA and other entities do not know what you know unless you tell them, so be clear and specific. 

Make sure to include full personal details of individuals such as middle names and dates of birth, addresses (past and present), phone numbers, passport details and personal transport information (car registration plates). 

If you’re reporting on an entity, such as a registered business or corporation, you also need to provide information such as VAT numbers, contact details and websites.

When it comes to providing your reason for suspicion, focus on why the behaviour or activity is unusual. Try to avoid being vague and using any unnecessary technical jargon and do not be afraid to suggest (if appropriate) which offences you think the individual/entity may be committing.   

Adhering to the above will help the NCA process your report in a swift manner, allowing any further investigations by the authorities to be conducted without unnecessary delays.  

References

[1]https://register.fca.org.uk/

[2]SARs Annual Report 2019

[3]https://www.gov.uk/guidance/money-laundering-regulations-nominated-officers-and-employee-training