UK’s FIU Issues New Guidelines for Suspicious Activity Reporting

The UK’s Financial Intelligence Unit (UKFIU) has issued new guidance in August 2021. The latest issue discusses how law enforcing agencies are using Suspicious Activity Reports (SARs) to combat criminal activities. The report aims at demonstrating the best practices for filing a suspicious activity report and what action is taken by the relevant authorities. 

Did you know more than 500,000 suspicious activity reports are filed to the UKFIU every year?

The new report by UKFIU has summarized real-world case studies to elaborate on updated requirements for reporting suspicious activities. Money laundering, romance scams, drug trafficking, employment fraud, and discrepancies in details of beneficial owners have been discussed to provide a clearer view to financial institutions (FIs) about the possible situations where suspicious activity reporting is necessary. 

Suspicious Activity Reporting (SARs) is a valuable tool for identifying sex offenders, money launderers, murderers, and tracing terror financing activities. While some SARs help in taking immediate steps to stop a crime, some reports uncover potential offences that must be investigated. 

SARs include contact details, investment activities, alias identities, and any other assets that can enhance ongoing operations or lead to new investigations. 

When is an SAR Filed?

In the late 1900s, regulatory bodies across the globe made it compulsory for financial institutions to report any suspicious transactions before the problem gets worse. Every law highlights the following three situations where SAR submission is mandatory for FIs:

• Transactions that exceed the predefined threshold 
• International transactions above the said amount 
• Unusual activity is observed in any account 

For instance, a customer making frequent transactions of $10,000 (that is above the limit set by law) will trigger suspicious activity reporting. 

Suggested: High-Risk Transactions – How Can Enhanced Due Diligence (EDD) Help? 

SARs Filing in the United Kingdom

The National Crime Agency (NCA) deals with suspicious activity reports in the United Kingdom. The financial institution nominates an officer who is responsible for filing the report and the report can be submitted online or in physical format depending upon the convenience of the business. However, the SAR Online system is recommended for faster and more efficient reporting. 

“The number of SARs filed were 264% higher in 2019 – 2020 than in 2018 – 2019 and 75% of these reports came from banks.” 

Real-world Scenarios Highlighted by UKFIU for SARs

Head of the United Kingdom’s Financial Intelligence Unit, Vince O’Brien said, 

“SARs are a critical intelligence resource for law enforcement – they provide information like phone numbers, addresses, company details, investment activity, bank accounts and details of other assets. They have been have been instrumental in identifying sex offenders, fraud victims, murder suspects, missing persons, people traffickers, fugitives and terrorist financing.”

Here is a short summary of the case studies discussed in the August booklet.  

Money Laundering 

Any high-risk entity who is being investigated for money laundering and has access to fake identity documents must be considered for reporting. The case quoted by the UKFIU mentions that an offender was being investigated and had opened several bank accounts with fake names. SARs alerted the officials and revealed that more than £200,000 worth of funds were moved through these accounts. 

Suggested Read: AML Screening – How it might infiltrate Your Business 

Fraud 

A reporter was auditing an account and submitted a Defence Against Money Laundering (DAML) request for suspected money laundering. The account was receiving large sums of money for months and none of the transactions were verified. Later, the funds were transferred to crypto platforms. Consequently, the Law Enforcement Agencies (LEAs) were able to acquire an Account Freezing Order (AFO) for over £20,000. 

Vulnerable Person/ Romance Scams

Over the years, many SARs have been submitted for so-called romance scams. Recently, a report was submitted to the financial intelligence unit where the subject was involved in a romance scam. The subject defrauded a number of elderly people and acquired more than £150,000 from the victims. The interesting part is, the criminal used associate accounts for receiving the funds and later on transferred money to his personal account. 

Drugs 

A report filed this year identified a subject (criminal) who’s personal profile did not match with the banking profile. Unexplained deposits were recorded from third parties and the money was immediately transferred to other linked accounts. After investigations by the LEA, the suspect’s house was searched and large quantities of drugs were found. The subject was arrested for on suspicion of possessing Class A drugs and possibly supplying them. 

Others 

The FIU received a DAML due to differences in beneficiary details of transactions into a subject’s account. Various other accounts with the same nationality had the same issue and the SARs submitted. This was suspected to be a possible case of employment fraud. The DAML resulted in a LEA investigation that led to freezing of this account as well as all the linked accounts. 

Key Takeaways

In a nutshell, reporting any suspicious activities is mandatory for all financial institutions. Money laundering and terror financing activities are on the rise and with sophisticated techniques available for facilitatingFinCrime, perpetrators must be identified on time. The August edition of suspicious activity reporting by the National Crime Agency has summarized real-world scenarios related to drug trafficking, money laundering and terror financing, fraud, and employment and romance scams. Submitting a SAR has been helping law enforcement bodies in combating criminal activities like terror financing for a long time and with regular updates, there is a high probability that any threats to the country can be brought down on time. 

Get more information about suspicious activity reporting from our experts.