How to make a suspicious activity report
Accountancy service providers are key gatekeepers for the UK’s financial system. As such, they are subject to anti money laundering (AML) regulations and have a significant role to play in ensuring that their expertise and services are not used to further criminal activities.
One of the AML obligations includes identifying suspicious activity and submitting suspicious activity reports (SAR).
Chapter 6 of AML guidance issued by CCAB requires businesses to have internal reporting procedures to enable relevant employees to disclose their knowledge of suspicion of money laundering or terrorist financing (MLTF) to their money laundering reporting officer (MLRO).
The MLRO has a duty to consider all such internal reports and if the MLRO also suspects MLTF, an external SAR must be made to the National Crime Agency (NCA). Only sole practitioners, who employ no relevant employees, have a duty to submit SARs straight to the NCA.
The key elements that require a SAR is: suspicion, crime, proceeds.
Suspicion is a state of mind that falls short of actual evidence-based knowledge but is more than a mere idle wondering.
A SAR is required when there is knowledge or suspicion of money laundering or there are ‘reasonable grounds’ to know or suspect that money laundering activities are taking place.
What is reasonable is an objective test, but it is understood as being the standard behaviour expected of someone with their qualifications, experience and expertise. In other words, relevant employees should exercise professional scepticism and judgement and, if unsure about what to do, they should consult their MLRO or if in doubt, err on the side of caution and report it to the MLRO.
Criminal conduct is behaviour which constitutes a criminal offence in the UK or, if it happened overseas, would have been an offence had it taken place in any part of the UK. Relevant employees are required to identify activities that would result in criminal proceeds. However, an innocent error or mistake would not normally give rise to criminal proceeds.
Criminal proceeds can take many forms: proceeds/goods from shoplifting, overpaid invoices, illegal dividends, bribes, proceeds from breaches of overseas laws, concerted price rises, but the most common that the accountant encounters is underpaid tax (corporation tax, income tax, VAT) as a result of over claimed expenses or undeclared sales.
In order for there to be a reportable offence, the person perpetrating the wrongdoing must have knowingly engaged in criminal activity from which he or she is expected to benefit.
View a proforma of internal SAR alongside other proforma documentation.
Below are extracts taken from the SAR annual report 2018 produced by the NCA which give examples of suspicious activities and the use of SARs:
Submitting a SAR
The simplest way of submitting a SAR is via the NCA's SAR online system. Before submitting a report you are required to register and activate your account. The NCA has issued user guidance to help you navigate its system.
The report can also be submitted on paper but you will not receive any acknowledgment of SAR sent.
The following information should be included (if available):
As a basic guide, please address the following six basic questions to make the SAR as useful as possible:
Remember to include: