Businesses submitted almost half a million suspicious activity reports (SARs) in 2018-19 – but the majority of reports regarding potential money laundering were never referred to law enforcement.
According to the National Crime Agency’s annual report, the UK Financial Intelligence Unit received a record 478,437 SARs from April 2018 to March 2019, 3% more than the previous year.
The number of reports requesting ‘defence against money laundering’ increased particularly steeply, rising by more than 50% to 34,543. However, 70% of these reports did not result in criminal investigations.
The NCA said cases are not referred to law enforcement when the risk of assets being dissipated is not immediate, when there is unlikely to be law enforcement interest, or when the assets are likely to be impossible to recover.
In spite of this, over £131m was ‘denied to criminals’ as a result of the money laundering reports, more than double last year’s total, according to the NCA.
In June, the Law Commission warned that low quality SARs, containing little or no useful intelligence, are swamping the reporting system.
Law commissioner Professor David Ormerod QC said ‘Enforcement agencies are struggling with a significant number of low-quality reports and criminals could be slipping through the net. The reporting scheme isn’t working as well as it should.’
Commenting on the NCA report, Daniel Burbeary, partner at commercial disputes firm Cooke, Young and Keidan, said: ‘The NCA is in a difficult position as there is an ever-increasing regulatory burden and pressure on financial institutions and professional services firms to file SARs.
‘Many firms and organisations file SARs to protect themselves from criticism in the future, and the threshold for what amounts to suspicion that is sufficient to trigger a reporting obligation is low.’