COVID-19 EXPERT LEGAL INSIGHTS

Suspicious Activity Report guidance updated in light of anticipated COVID-19 related crime

7 May 2020

The Chancellor of the Exchequer may be preparing to gradually wind down the Coronavirus Job Creation Scheme in the summer but its legacy will be felt for many years and in our previous blogs ‘Beware the hidden cost of furlough abuse’ and ‘Fraud in the time of COVID-19 – The law enforcement response’ we have considered the ways in which misuse of this scheme could result in criminal proceedings.


The National Crime Agency (NCA) anticipates criminal exploitation of the government schemes in guidance recently published for individuals making Suspicious Activity Reports (SARs). The SARs regime governs the reporting of knowledge or suspicion of money laundering or terrorist financing and the NCA’s UK Financial Intelligence Unit (UKFIU) receives more than 460,000 SARs a year.

The new guidance identifies additional types of suspicious activity relating to COVID-19. The UKFIU has therefore introduced three new “Glossary Codes” for reporters as a result of the increased threat posed by organised crime groups (OCGs) seeking to exploit the COVID-19 situation by means of fraud.  This is a code that is meant to be included in Suspicious Activity Reports to identify the type of suspicious activity that is being reported. The new codes are as follows.

HMRC Self-Assessment Tax Refund system

Whilst the system was introduced by HM Revenue & Customs (HMRC) prior to COVID-19, there is the potential for it to be exploited in the current climate.  A new code has been introduced for any SAR relating to suspected fraudulent use of the Self Assessment Tax Refunds system. This may relate to identifying a change in pattern or behaviour in accounts which could suggest fraudulent activity.

Government Priority Schemes

The government has introduced a number of schemes to offer support to businesses/individuals during the outbreak. Reporters should be alert to the potential for these schemes to be exploited by OCGs to commit fraud. A new code has been introduced for any SAR relating to suspected fraudulent use of Government Priority Schemes established as a result of COVID-19. This may relate to identifying a change in pattern or behaviour in accounts which could suggest suspicious activity.

General code

Finally, there is a new general code for any SAR relating to suspicious activity connected to COVID-19.

The NCA’s approach is consistent with law enforcement priorities developing to face COVID-19 related offending and it is also further evidence that the “new normal” will include significant law enforcement activity focussed on the misuse of the government schemes.

Further information

If you have any questions about any of the issues covered in this blog, please contact our team of criminal litigation lawyers.

 

About the author

Jonathan Grimes is a Partner in the criminal litigation team who specialises in serious and complex criminal cases. He represents individuals and organisations in all areas of financial services and business crime as well as health and safety and related areas. He has acted in numerous cases involving allegations of financial wrongdoing and has experience of investigations by SFO, FCA, HMRC, CMA, NCA and the police as well as a number of foreign investigative authorities. He has particular expertise dealing with law enforcement applications that seek to freeze or seize assets, including Account Freezing Orders and other applications made under the Proceeds of Crime Act (POCA). He frequently gives advice on money laundering issues including on the making of suspicious activity reports (SARs).

 

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