CH30- Suspicious activity reporting

Question 1

Suspicious activity reports (SAR)

Answer 1

Must be filed if knowledge or suspicion of ML offence

Required if REASONABLE grounds to know or suspect

Question 2

Suspicion is

Answer 2

State of mind more definite than speculation but falling short of evidence- based knowledge
A positive feeling of actual apprehension or mistrust
A slight opinion, without sufficient evidence

Question 3

Suspicion is not

Answer 3

A mere idle wondering

A vague feeling of unease

Question 4

Criminal conduct

Answer 4

Behaviour which constitutes a criminal offence in the UK, or if it happened overseas, would have been an offence if it had taken place in any part of the UK

Question 5

Overseas conduct exception

Answer 5

No requirement to report overseas matter if:
The conduct is reasonably believed to have taken place overseas
It was lawful where it took place
The max sentence had it been in the UK is <12 months

No overseas exemption for terrorist financing

Question 6

Innocent error/mistakes

Answer 6

An innocent error/mistake would not normally give rise to criminal proceeds
If client known to have acted in error, explain this

Question 7

Proceeds

Answer 7

Criminal proceeds take many forms, not just cash amounts
e.g. cost savings (tax evasion or ignoring legal requirements)
Where criminal property is used to acquire more assets, these also become criminal property
No de minimis value

Question 8

Reporting offences and defences

Answer 8

If knowledge or suspicion exists, file SAR as soon as practicable
Otherwise commit offence of failing to disclose

Question 9

Defences against failure to disclose

Answer 9

Reasonable excuse for not making disclosure (exceptional circumstances only e.g. threats to safety)
Information privileged
Relevant employee had not received training

Question 10

Tipping off

Answer 10

When a relevant employee in regulated sector discloses:

• SAR has been made and disclosure likely to prejudice future investigation
• Investigation already underway and disclosure likely to prejudice
• Relevant employee had not received training

Exceptions:

• Discussing with fellow employee
• Discussing with supervisory authority
• Discussing under terms of any court order

Question 11

Normal enquiries in pursuit of ordinary course of business

Answer 11

This is not tipping off

Question 12

Prejudicing an investigation

Answer 12

Makes a disclosure which is likely to prejudice it or falsifies, conceals, destroys or otherwise disposes of relevant document or causes another to do so

Question 13

Internal SAR

Answer 13

Assists employees establish their concerns- knowledge or suspicion
No need to carry out extensive investigations
If in doubt or on sider of caution
Single SAR can be submitted by more than one employee

Question 14

External SAR

Answer 14

Responsibility lies with MLRO
No prescribed format but an online submission is preferred
Overrides client confidentiality
SAR not required if information acquired in privileged circumstances

Question 15

Documentation

Answer 15

In order to control legal risks, important that adequate records of internal SARs are kept
Responsibility of MLRO

Question 16

The privileged circumstances exemption

Answer 16

Members of relevant professional bodies (relevant professional advisors) who know about or suspect ML, are not required to submit an SAR if information came to them in privileged circumstances
e.g. during the provision of legal advice and acting in respect of litigation

Question 17

Post SAR action

Answer 17

Need to ensure that ongoing client involvement is not a money laundering offence
May need consent from NC to be able to continue to work
If no refusal within 7 business days of request, consent deemed to be given
If consent refused, wait to end of moratorium period (31 days) before continuing client work
Caution when responding to requests from new advisers
Systems in place to be able to answer follow up queries promptly but be careful with respect to client confidentiality

Question 18

Moratorium period (31 days)

Answer 18

Manage client communication during period

Certain requirements under Data Protection Act 1998 relaxed

Question 19

What to include in external SAR

Answer 19

Name of reporter
Date
Name of suspect or info to help identify them
Details of who else is involved
Facts regarding what is suspected and why
Relevant NCA glossary code (if applic)
Whereabouts of any criminal property and info to help locate it
Actions business is taking which require consent

Question 20

What not to include in external SAR

Answer 20

Employees who made internal SAR to MLRO