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Enhancing Public Accountability: Key Elements of the Public Office (Accountability) Bill 2025
Kirsty Cook
The NCA’s UK Financial Intelligence Unit (UKFIU) has published its latest Annual Report (somewhat later in the year than usual). The UKFIU is responsible for receiving, analysing and disseminating intelligence submitted through the Suspicious Activity Reports (SARs) regime and its role is to alert law enforcement agencies, both at home and abroad, to potential instances of money laundering and terrorist financing.
Its latest report covers the period of April 2022 to March 2023, during which time sanctions against Russian-related entities and individuals continued to play a significant role in the overall financial crime regulatory landscape.
Despite this, however, the total number of SARs submitted fell by 5% compared with the year before. This is not entirely surprising, as a record high volume of SARs was recorded in 2021-22, and actual numbers are still high at almost 860,000.
The number of Defence Against Money Laundering (DAML) requests (made where a reporting person wishes to carry out a transaction but suspects the proceeds of crime may be involved) fell by 11%. Consequently, the amount of money denied to suspected criminals fell to £272.7M for 2022-23, in contrast to £305.7M the year before. However, the UKFIU reports that the number of cases where a DAML was refused and assets were subsequently restrained has increased by 37%.
“Although this is a reduction on the previous year, this is the second highest amount of funds denied from DAML requests in a single year,” states the report. This means that over the past two years alone, more funds have been denied through DAMLs than in the previous six years combined. Clearly, SARs are providing an effective and increasingly efficient method of gathering the kind of intelligence which allows the authorities to prevent assets getting into the hands of alleged criminals.
Receiving better quality SARs has been a strategic priority of the UKFIU for some time. The 2023 report is the first to be issued since the UKFIU’s new SAR portal was fully launched, and the first since institutions which submit a high volume of SARs were onboarded to new “bulk API technology”. The report mentions that these developments are already helping in improving the quality and utility of SARs, as are training sessions and engagement (both direct and through the SARs in Action magazine) with SAR reporters. For example., according to the report, the UKFIU delivered almost double the number of workshops and webinars in 2022-23 compared with the previous year.
Looking into the figures in the report in more detail, there was a drop in the number of SARs submitted in some sectors, notably banks (down 11.94%, but still totalling more than half a million SARs which is almost two-thirds of all reports submitted over the year), independent legal professionals (down 11.65%) and trust or company service providers (down by 54.29% from 140 to just 64 reports).
However, this was somewhat offset by a large increase in reports from other credit institutions (up 27.67%), other financial institutions (up 27.88%) and estate agents (up 21.79%). This may to some extent indicate a trend in the types of organisations being targeted by criminals and/or reflect wider market conditions; but clearly those sectors are maturing, too, with greater awareness of what could constitute suspicious activity.
There were smaller increases in SAR volumes in other sectors, including accountants (an increase of 3.24%) and high value dealers (up 2.63%). Interestingly, the number of reports from those outside the scope of the money laundering regulations also increased by about 3% (approximately 1000 SARs), perhaps suggesting a greater general awareness of anti-money laundering legislation. This could have arisen as a result of a number of high-profile financial crime stories in the general media during the period.
In 2022-23, DAMLs which were granted by UKFIU made up a greater proportion of the total number of DAMLs (16%, up from 13%) while those refused stayed the same at 3% of the total DAMLs.
Last year, we commented on the trend of reliance by law enforcement authorities on tools such as account freezing orders (AFOs), which, while an important part of the crime-fighting toolkit, come with significant risks. According to the latest UKFIU report, the value of assets the NCA restrained, forfeited or froze by way of AFOs as a result of refused DAML requests continues to rise. While not as marked as 2021-22 (when it increased from £60M to £114M), there was a nevertheless significant further increase to £120M (a 6.1% rise).
Notably, in 2022-23, the FIU reported seven breaches in confidentiality – there were none in the previous reporting period. No further details are provided on this statistic in the report, and so we could only speculate as to the source of those breaches.
The 2023 UKFIU SARs report can be downloaded here.
Further Information
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Nicola Finnerty is a leading criminal defence expert in white collar and business crime, general criminal defence, and proceeds of crime and asset forfeiture.
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