For busy professionals with many competing priorities, due diligence may not always be at the top of the list. However, it is a fact that serious and organised criminals target professionals within the accountancy sector to facilitate money laundering. More than £90 billion could be laundered through the UK annually. The Flag It Up campaign, developed by the Home Office, NCA and the Accountancy Affinity Group (AAG), is encouraging professionals to stay vigilant against this use of their services to disguise these proceeds of crime. As bookkeepers, you are in a privileged position to identify any suspicious activity within client accounts – particularly if your firm is a small to medium enterprise, which are known to be targets for criminals. By flagging it up, you can play a key role in tackling this criminality.
If something doesn’t quite add up, you shouldn’t hesitate to question clients. You are the first line of defence against the reputational and legal risks to you and your organisation of unwitting involvement with criminals. Asking the right questions should be considered a key undertaking of effective due diligence. If the client evades the question, or their answer is not comprehensive, then alarm bells should start ringing.
If there is enough to constitute a suspicion of money laundering, a Suspicious Activity Report (SAR) must be submitted to the NCA. The easiest way to do this is through the online system on the NCA’s website, which will provide an instant acknowledgement and reference number. SARs can be submitted directly by you, or through your organisation’s Money Laundering Reporting Officer (MLRO).
Do you know the red flags?
As well as following the correct due diligence procedures, harnessing your professional intuition is crucial to spotting the red flags:
- Clients – Do they refuse to provide all the necessary information and documents? Are there inconsistencies in what they say? Is the client atypical of your normal business demographic, whether due to scale, sector or any other factor?
- Funds – Is the amount and source of funds unusual? Is the client using multiple bank accounts or foreign accounts without good reason? Are the funds received from or sent to high-risk countries?
- Transactions – Are there discrepancies in client transactions? Is the client involved in transactions which do not correspond to their normal professional or business activities? Are the transactions unusual because of their size, nature, frequency, or manner of execution?
Tips for reporting
Reporters need to provide as much detail as they can concerning the subject of their suspicion and their reasons for it. The information provided in SARs can be essential for law enforcement in tracking down criminals. Here are some tips for completing SARs:
- Use names, surnames and dates of birth – These key identifiers are used by law enforcement to corroborate the identity of individuals. Where information is not known, using the word UNKNOWN may negate the need for law enforcement to contact the reporter to ascertain whether the information exists.
- Include relevant transactions – The majority of Defence Against Money Laundering (DAML) SARs include transactions that relate to the request for a defence against a principal money laundering offence. It is important from an investigation point of view to include relevant transactions in the SAR, including the method of the transaction and an indication as to where the request of funds is going to and from.
- Use SAR glossary codes – This is good practice and allows the UK Financial Intelligence Unit (UKFIU) and wider law enforcement to conduct analysis to identify money laundering trends. Where appropriate, multiple glossary codes should be used.
If you have suspicions, you have to flag it up.
For more detailed information on submitting SARs, please refer to the UKFIU’s user guidance: www.nationalcrimeagency.gov.uk/about-us/what-we-do/economiccrime/ukfiu
And for further information on Flag It Up, visit the campaign web page: https://flagitup.campaign.gov.uk/
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