CH30- Suspicious activity reporting Flashcards
Suspicious activity reports (SAR)
Must be filed if knowledge or suspicion of ML offence
Required if REASONABLE grounds to know or suspect
Suspicion is
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
Suspicion is not
A mere idle wondering
A vague feeling of unease
Criminal conduct
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
Overseas conduct exception
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
Innocent error/mistakes
An innocent error/mistake would not normally give rise to criminal proceeds
If client known to have acted in error, explain this
Proceeds
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
Reporting offences and defences
If knowledge or suspicion exists, file SAR as soon as practicable
Otherwise commit offence of failing to disclose
Defences against failure to disclose
Reasonable excuse for not making disclosure (exceptional circumstances only e.g. threats to safety)
Information privileged
Relevant employee had not received training
Tipping off
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
Normal enquiries in pursuit of ordinary course of business
This is not tipping off
Prejudicing an investigation
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
Internal SAR
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
External SAR
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
Documentation
In order to control legal risks, important that adequate records of internal SARs are kept
Responsibility of MLRO
The privileged circumstances exemption
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
Post SAR action
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
Moratorium period (31 days)
Manage client communication during period
Certain requirements under Data Protection Act 1998 relaxed
What to include in external SAR
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
What not to include in external SAR
Employees who made internal SAR to MLRO
