The UK Financial Intelligence Unit (UKFIU) has published its Suspicious Activity Reports (SARs) Annual Report for 2019. This report summarises the performance of the UKFIU and the National Crime Agency (NCA) in terms of the number of SARs processed and the results arising from them and it makes for some very interesting reading.
Overall, the report strikes a positive tone and there are a few facts contained in it that are particularly noteworthy:
- The number of SARs being submitted continues to increase. Between April 2018 and March 2019, 478,437 SARs were submitted. This is an increase of 3.13% on the previous year. This is significant, especially because concerns have been raised in the past about whether the UKFIU and NCA can handle the volume of SARs being submitted.
- Defence Against Money Laundering SARs (DAML SARs) have hugely increased in number. In 2018/2019, 34,543 DAML SARs were submitted. This is a large increase of 52.72% compared to last year. While there are no clear reasons given in the report as to why so many DAML SARs are now being submitted, we consider it likely that submissions relating to investments in the legal cannabis industry abroad will have contributed at least in some small part to this increased number.
- The DAML SARs are producing significant law enforcement results. The most significant story arising out of these facts is that in 2018/2019, £131,667,477 was denied to criminals as a result of DAML SARs and related action by the authorities. This is a huge increase of 153.66% on the previous year. Interestingly, the reason given for this in the report is the introduction of Account Freezing Orders (AFOs) in the Criminal Finances Act 2017 and the extension to the moratorium period associated with those AFOs. It is very interesting to see the immediate effect of those new powers be quantified in this way and is perhaps an indication of the strategic approach the UK authorities will take in the coming years. You can access a copy of our article on AFOs, and how they work, here.
- SARs from legal professionals – still not enough, but the numbers are increasing. Lawyers have in the past been criticised for not submitting as many SARs as might be expected. According to the 2019 Annual Report, independent legal professionals submitted 0.58% of the total number of SARs in the past year. While this is a small number (the head of the UKFIU notes in the report that “the number of reports from lawyers and accountants remains low”) it does represent an increase of 4.29% on the previous year.
In general, the UKFIU appears to be pleased with how the SARs system operates. It has taken on additional staff (growing from 80 to 118) and is investing in new IT systems to process the SARs it receives. Having recently been the focus of a Law Commission report as well, it appears that the SAR system is here to stay and may increasingly be relied on by the UK authorities.
Over the year £131,667,477 was denied to criminals as a result of DAML requests (refused and granted) where law enforcement obtained restraint or used new civil powers under the Criminal Finances Act 2017 (CFA) to freeze an account. This is up considerably from the previous year, when £51.9m was denied.