Lawyers must fix the problems with gagging orders before it is too late
The National Crime Agency (‘NCA’) has now published its annual review of Suspicious Activity Reports (‘SARs’).
Under the Proceeds of Crime Act 2002 (‘POCA’), a person is required to submit a SAR where they have knowledge or suspicion that someone is engaged in money laundering. When submitting the SAR, the reporter will sometimes request the consent of the NCA to undertake an activity which the reporter suspects may constitute money laundering. This gives them a defence against prosecution in relation to that transaction and if consent is granted, allows them to carry on business as usual.
In total 381,882 SARs were received by the NCA in the 14/15 reporting year. This included 14,672 consent SARs, of which 9.4% were initially refused. An additional 12.5% of requests were closed due to them being withdrawn, submitted in error, or lacking sufficient information for the request to be processed.
The banking sector made 83.39% of all SARs, accountants and tax advisors made 1.21%, legal professionals 1%, and estate agents only .09%. Despite this, 17.8% of all consent SARs came from legal professionals.
Though the number of SARs increased by 7.82%, the total funds restrained as a result of the reports dropped by £98,438,324 to £43,079,328. The report states that this is due to the previous year’s figure being skewed by five large cases with a cumulative value of £119 million.
During the reporting period 1,899 SARs were disseminated to the National Terrorist Financial Investigation Unit and Counter Terrorist Units, an increase of 42% on the same period in the previous year.
The average turnaround time for responses to reporters was 4.7 days, an increase from 4.3 days in the previous year. A small number of SARs are still received in paper rather than electronic format, which leads to delays, as the UKFIU is then required to manually input them on the database before they are processed.
Regulator access to SARs
During the reporting period, the UKFIU approached anti money laundering (‘AML’) supervisors and regulators to ascertain whether they had any interest in accessing SARs directly. Surprisingly the report states that regulators did not want direct access, but simply better information from the SAR regime. As part of a trial the HMRC AML team was given direct access to SARs, but this is not a major change, given that HMRC already had direct access as part of its law enforcement capability. However, the fact that this trial went ahead despite the lack of appetite from regulators, could indicate the UKFIU’s desire to increase the use of direct access in future.
During this reporting period, there have been three formal allegations of breaches of confidentiality. The first involved the reporter of a SAR being mentioned in a media article. The second breach occurred when a foreign financial intelligence unit inadvertently tipped off the subject of the SAR. The final allegation related to a law enforcement agency disclosing the existence and content of a SAR. An investigation into a further breach was on-going at the end of the reporting period. If direct access to SARs is extended, so to might concerns regarding confidentiality.
The figures show an improvement on reporting statistics in the majority of categories in the last year. However, there is clearly still a lot of room for improvement, particularly amongst the legal, estate agent and accounting sectors.
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