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NCA receive record high number of Suspicious Activity Reports in 2018

Posted on 22 January 2019

NCA receive record high number of Suspicious Activity Reports in 2018

The National Crime Agency ("NCA") recently published its annual report on Suspicious Activity Reports ("SAR") highlighting the record number of SARs received in 2018. The report stated that the body responsible for overseeing the SARs regime, the Financial Intelligence Unit, processed a record 463,938 SARs representing an increase of around 10% from the previous year.

What are Suspicious Activity Reports?

A SAR is a report made to the NCA alerting the Financial Intelligence Unit to certain activity that is suspicious and may show signs of money laundering or terrorist financing. A SAR should be submitted as soon as an individual knows or suspects, or has reasonable grounds for knowing or suspecting that a person is engaged in money laundering or terrorist financing. Where an individual or organisation knows or suspects this to be the case, that individual or organisation will have a defence in relation to that activity where a SAR is submitted to the NCA and:

  1. before the end of the seven day notice period, the NCA does not provide notice that consent to the doing of the activity is refused; or
  2. before the end of the seven day notice period, the NCA provides notice that consent to the doing of the activity is refused and the 31 calendar day moratorium period has expired.

Submitting a SAR therefore provides the NCA with key information on potential criminality while also protecting the individual or organisation making the submission and the integrity of the financial system as a whole.

The NCA annual report stated that of the 463,938 SARs received in 2018, 22,196 of those were requests for a defence against money laundering. The number of such requests made in 2018 represented a 20% increase from the previous year. As highlighted in our previous blog on Unexplained Wealth Orders, government rhetoric surrounding the issue of economic crime has increased following the nerve agent attack on a former Russian spy and his daughter in Salisbury last year. Despite the UK being awarded a gold star by the global anti-money laundering watchdog, the Financial Action Task Force ("FATF"), it was pointed out by the task force that the SARs regime needed a "significant overhaul to improve the quality of financial intelligence available".

As was previously discussed in our blog, the FATF also cited concerns with regards to the low number of SARs by lawyers and accountants. The NCA reported that the legal sector had submitted approximately 12% fewer SARs in 2018 compared with the previous year contributing to just 0.57% of the total number submitted. The FATF also criticised the NCA's Financial Intelligence Unit stating that the government needed to allocate more resources to update the unit.

What are the government's plans to tackle economic crime in 2019?

The creation of a new government task force named the Economic Crime Strategic Board was announced on 14 January 2019 to help tackle economic crime including fraud, bribery, corruption and money laundering. The board will be jointly chaired by the Home Secretary and the Chancellor of the Exchequer and will include chief executives from a number of financial institutions including Barclays, Lloyds and Santander as well as senior figures from the NCA, the Solicitors Regulation Authority and other regulatory bodies. The board will meet twice a year to set priorities, direct resources and examine performance against the level of economic crime.

At the unveiling of the board, Home Secretary Sajid Javid said that the government is "investing millions in the fight against economic crime" and that it is "crucial [that the government] works closely with [their] financial sectors partners to win this battle". At the board's first meeting, the Home Secretary confirmed that the Home Office will commit an additional £3.5million to support reforms to the SARs regime.

Acknowledging the government's renewed efforts to tackle economic crime, the NCA confirmed that the SARs regime would be updated as a "matter of urgency". The NCA annual report stated that SARs reform would include updating the outdated IT system and the creation of an additional 46 roles in the unit which monitors SARs.

The impact that the new government task force and the reformed SARs regime will have on combatting economic crime in the UK remains to be seen; however one certainty is that the government and enforcement agencies are maintaining their commitment to tackling economic crime in 2019.

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