The National Crime Agency's Suspicious Activity Reports Annual Report shows that the UK Financial Intelligence Unit processed a record number of 463,938 suspicious activity reports in 2018, 22,619 of which were requests for consent for transactions to go ahead.

The NCA believes, however, that the 'consent' SARs resulted in a rather paltry £51,907,067 being denied to criminals - a figure out of all proportion to the effort and treasure that banks, asset management firms and other reporting entities had to expend on their generation. Set against this dismal figure it records one triumph, saying that US$500 million was denied to criminals as a result of its refusal to offer consent (to which the NCA has taken to calling "defence against money laundering" or DAML) relating to funds transferred to British fraudsters from overseas. The case involved state funds and, to protect these and help an international investigation, the NCA made use of the vastly extended moratorium period (the period during which the NCA can command a bank/firm to hold someone's funds while it inspects the SAR and decides what to do) that came in with the Criminal Finances Act 2017. A High Court judge froze the funds and they went back to the account from whence they came, thereby thwarting the fraud.

The main news for private bankers is that the UKFIU read and processed 26,667 SARs relating to politically exposed persons or PEPs (up 38.19% on the previous year) and disseminated 1,419 to law enforcement agencies - a staggering increase of 64.62% on the figure of 862 from the previous year.

Case studies

The SARs regime allows for the identification of members of the public who are vulnerable or likely to become vulnerable to financial crime and the associated money movement. The UKFIU is able to identify new SARs that fall into this category and send them off quickly to police forces. Over the year the UKFIU expedited the dissemination of 3,615 'vulnerable person' SARs - up 37.61% on the figure of 2,627 from 2016-17.

This, too, is an issue for HNW individuals, who suffer from the same frailties as other citizens. The report contained a few sanitised accounts of SARs helping to protect such people. In one example, a fast-tracked SAR resulted in a multi-agency operation to protect a vulnerable person who was being physically abused. The person who sent the report - perhaps at a bank - was concerned that a customer was abusing his or her position as a carer to benefit financially. The carer was subsequently prosecuted.

Similarly, the UKFIU fast-tracked a SAR to the police after the reporting entity raised concerns that its octogenarian customer might be a victim of fraud/theft. Just short of 100,000 in total had left the account, raising concerns that the customer was being exploited. Policemen visited the subject, who agreed to not send any further money.

As the result of a SAR indicating a possible 'romance scam,' police made enquiries on their internal systems which linked the person who was mentioned in the SAR to a blackmail investigation that was still in progress. Working with financial institutions and using the intelligence gateways, the police were able to follow the blackmail funds and identify the offender in an area policed by another force. As a result a package of evidence was created and passed to the other police force, which took over the investigation. This investigative action contributed to the dismantling of this criminal enterprise and prevented further loss to future potential victims. The offender received a prison sentence.

Another SAR showed that a customer had sent some money transfers to receivers overseas. The police visited her and she admitted to having sent money to a sergeant in the US Army whom she had met online. She realised that this had been a fraud and guessed that she had sent approximately £50,000.

Vital statistics

Out of the total of 463,938 SARs that reporting entities submitted in 2017-18, 5,036 came from accountants, 371,522 came from banks, 662 came from asset management firms, 81 came from charities, 11,467 came from electronic payment, 710 came from estate agents, 71 came from dealers in goods of high value, 12,366 came from money transmission, 37 came from mortgage providers, 87 came from private individuals, 204 came from regulators, 464 came from retail intermediaries, 2,402 came from solicitors, 742 came from spread betting firms, 303 came from stockbrokers, 104 came from tax advisors, 53 came from trust and company service providers. Among the 22,619 'defence against money laundering' SARs, a hefty 12,053 came from banks.

There is some declaratory rhetoric in the report about the Financial Action Task Force's visit to the UKFIU in March last year as part of its glowing assessment of the UK, which turned out to be almost as favourable as that of Jersey. The Home Office is overhauling the SARs regime at the moment and supplying it with new IT.