Suspicious Activity Reports Case Studies
Key elements of a Suspicious Activity Report (SAR)
Ideally a SAR will include as much detail as possible on each of the following:
- The information or other matter which gives the grounds for knowledge, suspicion or belief
- A description of the property that is known, suspected or believed to be criminal property
- A description of the prohibited act for which consent is sought
- The identity of the person or persons known or suspected to be involved in money laundering
- The whereabouts of the property that is known or suspected to be criminal property
Insufficient detailIn some cases information may simply not be available. However if the detail can be provided in first instance then the reporter should so, so as to avoid any unnecessary follow up and consequent delay.
The following are examples of where the reason for suspicion lacked sufficient detail on which law enforcement would be able to act. Also included are suggestions of things to consider which could be included if the detail was available.
Example 1 – Information has come to our attention that the main subject has been convicted of a drug trafficking offence.
How has this information come to the attention of the company? When did the information come to the attention of the company? What work do the company do for this client? Are there any further suspicions or irregularities aside from the conviction? What is the suspicion? Is the suspicion related to money laundering or is there any suspicion of links to terrorist financing?
Example 2 – My client has told me that he is not declaring all of his income.
When did the client advise this? What is his declared income? Did he disclose what amount of earnings he is not disclosing and why? Can further content of any discussions that have taken place be detailed? Is there any suspicion that the subject is attempting to launder funds for criminal gain?
Example 3 – We are Mr Jones’ accountants and noticed the issue on preparing the accounts.
What is the issue the accountants have become aware of and when did this occur? Have there been any discussions with the client over this issue? Have there been any past irregularities? Is there a business involved? Is there a suspicion that money laundering is occurring? Are there reasonable grounds for suspecting any links to terrorist financing?
Consent case study
A SAR was received by an accountant requesting permission to submit accounts for their client. The accountant had been asked by the director of the company to include figures that appeared excessive. As a result, they held a suspicion of corporate tax fraud. The consent required box had been ticked. On review by a Consent Team officer, it was immediately identified that the accountant had requested consent to submit accounts which they knew not to be a true reflection of the business activity. Accordingly, the Consent Team could not progress this report without clarification of their activity because the act specified, constituted a separate criminal offence on the part of the accountant. The Consent Team officer contacted the accountant to discuss and explained that consent under POCA provided a criminal defence to money laundering and did not provide a criminal defence against other criminal offences pertaining to the proposed act. When it became clear that the reporter was not seeking a defence to money laundering, the case was closed. The accountant however was unavailable when the officer called several times. The case was resolved after four days.
- A SAR reported that a limited company was deliberately understating its business income on its VAT returns. HMRC confirmed that the information in the business records and that declared on its VAT returns did not match, resulting in a significant settlement of over £80,000. The estimated benefit was over £25k. The investigator stated that the SAR information was vital to HMRC in tackling this VAT evasion.
- A SAR reported that a manufacturer had deregistered from VAT despite the fact that the turnover remained well in excess of the VAT registration threshold; that the company’s records were incomplete; and that cash sales had been suppressed. The enquiry established from the Corporation Tax returns that its turnover remained well in excess of the turnover limit for VAT. A settlement of over £60k resulted. This successful outcome could not have happened without the SAR information.
- A SAR noted that a business owner had been depositing large cheques and round sum amounts of cash into their personal savings account. The funds appeared to originate from their business. The HMRC investigation secured an admission by the trader that they had been under-declaring their sales for a number of years, resulting in a settlement of just under £40k. The SAR information secured this outcome.
- A consent SAR assisted in difficult confiscation proceedings which the defendant was attempting to frustrate by claiming that their properties should be considered to be the assets of their current partner, and of their former partner, rather than being their own. The SAR however showed that the defendant was trying to sell a restrained property without seeking the permission of the court, thereby confirming it as being their own asset.
- A SAR reported that a review of a company’s books suggested that significant payments had been made for casual labour without any deductions of tax and national insurance being made. The enquiry revealed that this was not in fact the case, but found there had been other major inconsistencies around expenses. A settlement of over £60k resulted. Although the SAR information did not specifically lead to the eventual outcome of this enquiry, it is highly unlikely that these other issues would have been uncovered without the SAR.