The 2020 Suspicious Activity Report (SAR) Annual Report was published on 19 November, reporting a record number of SARs. SARs must be submitted if institutions such as banks suspect money laundering or terrorist financing. The UK Financial Intelligence Unit (UKFIU) processed 573,085 SARs, which represents a 20% increase on the previous period. There was an even greater rise in the number of Defence Against Money Laundering (DAML) submissions (in which a submitter seeks a defence to a potential money laundering offence); increasing 81% from the previous period to 62,408. The figures are for the period April 2019 – March 2020 and continue the upward trend in SAR and DAML reporting of recent years.
This increase in submissions was accompanied by an increase in the amount denied to suspected criminals on the basis of information received. The reporting period saw £172m denied to suspected criminals, of which more than £100m was in relation to cases where there was no previous or existing law enforcement investigation. This latter statistic shows part of the value of the SAR regime - in providing unique information to law enforcement. However put in the context of the estimated £100bn which is laundered through the UK each year, there is arguably room for improvement.
Another statistic which could highlight the need for reform of the SAR regime is the relatively low number of refusals which were issued in response to DAMLs. Of over 62,000 DAMLs submitted, only 2,055 were refused, dropping to 1,365 refusals after the initial moratorium period. One possible explanation for this low percentage could be that the UKFIU has inadequate resources to comprehensively assess the high volume of DAMLs it receives.
The call for improvement and reform of the SAR regime has been made numerous times in recent years. In their 2018 review of the UK, the Financial Action Task Force described the UK SAR regime as needing a “significant overhaul” and in the same year, the UK’s Law Commission set out proposals for changes to the system. More recently the National Crime Agency has called for reform; particularly highlighting the problem of low quality or unnecessary reports.
There has been some innovation this year with the UKFIU beginning to publish information, as well as receive it. A regular bulletin has been published since March 2020 outlining the themes and trends relating to Covid-19 related crimes as drawn from their analysis of SAR reporting. Another lesser known area of the UKFIU’s work highlighted in the Annual Report was their collaboration with international agencies. This year the UKFIU co-led a project focused on the financial flows associated with online child exploitation and abuse with the Australian and Philippines FIUs.