The National Crime Agency (NCA) have released updated guidance on submitting a better quality Suspicious Activity Report (SAR), making it a good time to revisit what they are and why they’re so important.
A SAR alerts law enforcement to potential instances of money laundering or terrorist financing. In conveyancing, one of the most likely reasons to report a SAR would be upon identifying several high-risk factors when reviewing Source of Funds (SOF) and Source Wealth (SOW) reports.
Irrespective of whether you end the retainer or not, in order to benefit from a defence under section 330 of POCA, you must make an internal SAR to your money laundering reporting officer (MLRO) as soon as practical on forming knowledge or suspicion of money laundering.
The Legal Sector Affinity Group (LSAG) guidance states that you must submit a SAR:
- If you know, suspect or have reasonable grounds for knowing or suspecting money laundering or terrorist financing where that information has come to you from work in the regulated sector (subject to privilege); or
- If you are proposing to engage in a prohibited act under sections 327 to 329 of POCA and require a defence against money laundering.
The guidance on submitting a better-quality SAR looks at how the SAR is submitted, what a good structure looks like, and touches upon some of the key reporting elements.
SAR Online is designed to allow SARs to be constructed and submitted in a secure manner, negating the need for paper-based reporting and to support you by providing help text and pop-up tips along the way. It is recommended that the registering user be an official responsible for Anti-Money Laundering (AML) compliance within the organisation (in practice this could be the Money Laundering Reporting Officer [MLRO], or Deputy Money Laundering Reporting Officer (DMLRO).
Below are some key pieces of advice when submitting a SAR:
- Structure your report in a logical format including all relevant information.
- Provide a chronological sequence of events.
- Keep the content clear, concise and simple. Don’t use capital letters for example, this makes a lengthy text difficult to read.
- Break it up into more manageable and readable paragraphs if including a large amount of information/text. Simple, digestible text is preferred by the regulators.
- Don’t use acronyms or jargon – they may not be understood by the recipient and are open to misinterpretation.
- Maintain internal records of internal queries, concerns and issues for future reference.
Overall, the reason for your suspicion should be briefly summarised and explicitly clear.
Why are SARs important?
Aside from the importance and value of preventing money laundering to society, for conveyancers and indeed for financial and professional firms in general, submitting a SAR can help to mitigate the risk of also being implicated if money laundering is later found. To do this, when you submit your SAR but you are proceeding with the matter anyway, you must request a Defence Against Money Laundering (DAML) consent from the NCA. If granted, you should receive this within 7 days and it will provide you with a defence against principal money laundering offences under the Proceeds of Crime Act 2002 (POCA).
