SARs: all you need to know
A risk-based and robust approach to due diligence procedures is crucial to confronting the threat of money laundering. As criminals target our sector with increasing sophistication, the Flag It Up campaign, developed by the Home Office, National Crime Agency (NCA) and Accountancy Affinity Group (AAG), is encouraging professionals to stay vigilant against the exploitation of their services.
As financial accountants we have a duty to identify any suspicious activity within client accounts, to which we have privileged access. By flagging up your suspicions, you are playing a key role in tackling criminality, and helping to build a safer society.
It is the responsibility of accountants to make anti-money laundering measures a key priority in order to minimise the reputational and legal risks of unwitting involvement with criminals.
The first line of defence if something looks dubious, is to dig deeper and ask questions of the client.
Alarm bells should start ringing if they evade questions, or give incomplete or incomprehensible answers.
If there is enough to constitute a suspicion of money laundering, a Suspicious Activity Report (SAR) must be submitted to the NCA. The easiest way to do this is through the online system on the NCA’s website, which will provide an instant acknowledgement and reference number.
SARs can be submitted directly by you, or through your organisation’s Money Laundering Reporting Officer (MLRO).
Do you know the red flags?
As well as following the correct due diligence procedures, harnessing your professional intuition can be crucial to spotting the red flags:
- Secretive clients – do they refuse to provide all the necessary information and documents? Are there inconsistencies in what they say? Is the client atypical of your normal business demographic, whether due to scale, sector or any other factor?
- Funds – is the amount and source of funds unusual? Is the client using multiple bank accounts or foreign accounts without good reason? Are the funds received from or sent to high-risk countries?
- Transactions – are there discrepancies in client transactions? Is the client involved in transactions which do not correspond to their normal professional or business activities?
Tips for reporting
Reporters need to provide as much detail as they can on the subject of their suspicion and their reasons for it. The information provided in SARs can be essential for law enforcement in tracking down criminals.
Here are some tips for completing SARs and Defence Against Money Laundering (DAML) SARs provided by the UK Financial Intelligence Unit (UKFIU):
- Use names, surnames and dates of birth – these key identifiers are used by law enforcement to corroborate the identity of individuals. Where information is not known, using the word UNKNOWN may negate the need for law enforcement to contact the reporter to ascertain whether the information exists.
- Include relevant transactions – the majority of DAML SARs include transactions that relate to the request for a defence against a principal money laundering offence. It is important from an investigation point of view to include relevant transactions in the SAR, including the method of the transaction and an indication as to where the request of funds is going to and from.
- Use SAR glossary codes – this is good practice and allows the UKFIU and wider law enforcement to conduct analysis to identify money laundering trends. Where appropriate, multiple glossary codes should be used.
If you have suspicions, you have to flag it up.
For further information on Flag It Up, visit the campaign web page.
For more detailed information on submitting SARs, please refer to the UKFIU’s user guidance.