Suspicious Activity Reports (SARs) are submitted by reporters, including accountants, where there is the knowledge or suspicion that an organisation or individual is engaged in money laundering or terrorist financing. Submitting a SAR provides law enforcement with valuable information about potential criminality. It may also protect you and your organisation from laundering the proceeds of crime.
The SARs database currently holds approximately 3.8 million reports and recent years have seen a ramping up of submissions, with more than 900,000 SARs received in the past year alone. The regime provides a wealth of intelligence that, without the support of the UK’s regulated sector, would not be available to our law enforcement partners.
While anyone can submit a SAR, those working in the regulated sector are required under Part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 (TACT) to submit a SAR if in the course of their business they know, suspect, or have reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting to engage in, money laundering or terrorist financing.
All reporters, whether in the regulated sector or not, should submit a SAR under either the Proceeds of Crime Act 2002 (POCA) or Terrorism Act 2000 (TACT), which set out a number of defined criteria including:
- The reason for suspicion
- A description of the property concerned (including value where possible)
- And for Defence Against Money Laundering and Defence Against Terrorist Financing, the prohibited act that they wish to carry out.
In addition, those in the regulated sector (as defined by the Money Laundering Regulations 2017) have additional requirements under POCA including providing the identity of the persons involved, the whereabouts of the criminal property and/or any information they have which they believe, or it is reasonable to expect them to believe, may assist in identifying these.
This information is integral for both managing SARs at the UK Financial Intelligence Unit (UKFIU) and investigating crime from the UK’s law enforcement community. If SARs are split into these criteria and written in a chronological order, it allows officers to read bulk amounts of intelligence effectively, without becoming fatigued. It also ensures that the correct information is included to provide as many lines of enquiry as possible to law enforcement.
However, there is little value in holding millions of SARs if they’re written in a way that either makes it difficult for the UKFIU to validate and manage the regime, or means that law enforcement cannot exploit the reports for use in their investigations.
SARs are not just used in financial investigations; they can be used in any law enforcement investigation and are searchable by accredited officers for several years. The UKFIU is a member of Egmont, an international organisation that facilitates and prompts the exchange of information among financial intelligence units. It means that disclosures made into the UK’s SARs database have the potential to assist investigations in many parts of the world, so the scope and potential of SARs’ reports truly is massive.
The Reporter Engagement Function within the UKFIU has compiled a guidance document to help reporters create well-written SARs that are fit for purpose. I’ve also come up with three key pieces of advice to ensure any SAR you submit meets our stringent standards and stands the most chance of helping to identify criminal activity.
These are used to identify specific categories of suspicious activity and should be included in any report you submit. More than just an administrative detail, these glossary codes are crucial for enabling the UKFIU to conduct analysis, feed intelligence pictures up to our senior management teams and fast-track high-risk or time-sensitive cases for development.
Typical codes used by the accountancy sector are tax evasion codes, e.g. XXTEOSXX (Tax evasion offshore), XXTEUKXX (Tax evasion UK-based), XXF3XX (Corporate tax evasion) and XXF4XX (Personal tax evasion). However, it is best practice to use all codes that apply to the reporter’s suspicion – the latest glossary code booklet is available on the UKFIU website.
The UKFIU and wider law enforcement read hundreds, even thousands of SARs every week. Adhering to the right structure and ensuring that all required elements of the Proceeds of Crime Act or Terrorism Act have been met means that we are able to validate SARs quickly. It also means we will be less likely to refer back to the reporter for further information, which in turn streamlines the SARs’ process and ensures all parties can manage resources more effectively.
Additional useful information
Put yourself in the shoes of an investigator and consider if there’s any additional information that you could supply that would be useful, given the context of your SAR. For example, account numbers are unique identifiers and searchable by law enforcement. If funds are moving overseas, it’s best practice to include the jurisdictions.
One of the biggest mistakes reporters make is including reams of transactional data as opposed to telling a story as to why they are suspicious. To help write your SAR, consider answering the following questions:
- Who is involved?
- How are they involved?
- What is the criminal/terrorist property?
- What is the value of the criminal/terrorist property (estimated if necessary)?
- Where is the criminal/terrorist property?
- When did the circumstances arise?
- When are the circumstances planned to happen?
- How did the circumstances arise?
- Why are you suspicious or why do you have knowledge?
Transactional data will often be necessary to demonstrate criminal property, but try to focus on any specific transactions that have led to your suspicion. Only include those transactions that directly relate to the suspicious activity described and explain why you think the transaction supports your reason for suspicion.
If you are filing a SAR because the police got in touch with you, let us know which police force or unit it was (please do not include any officers’ names) so we can ensure that it is sent to the correct place. Consider including other information, such as IP addresses for your subject, or advising in the SAR if you hold scanned documents such as copies of passports. By doing that, the investigators know exactly where to look for the intelligence they require to further their investigation.
Michael Jones works in the Reporter Engagement Team at the UKFIU, the body responsible for receiving and analysing SARs and disseminating intelligence to law enforcement agencies both within the UK and overseas.
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