Latest SARs Intelligence Released in New UKFIU Publication for Reporting Entities

On March 23, the UK Financial Intelligence Unit (UKFIU) issued its second Suspicious Activity Reporting (SAR) Booklet of 2023. Published two or three times a year, the UKFIU’s SAR Reporter Booklets are produced in line with the National Crime Agency’s (NCA’s) commitment to sharing perspectives on the SAR regime. In the latest edition, reporting best practices are shared through the lens of 12 case studies. 

According to the NCA’s annual SAR report, 21 percent more SARs were filed and processed in 2022 compared to the previous financial year. As a result of Defence Against Money Laundering (DAML) requests, £305.7 million was denied to suspected criminals – representing a 120 percent increase on the £138.6 million denied from 2020 to 2021.  

SAR Case Studies

The case studies in the booklet are organized into three subcategories: money laundering, vulnerable persons, and fraud and drugs. Law enforcement agencies and other relevant government bodies provided each account, focusing on how SARs continue to be instrumental in instigating and supporting financial crime investigations. 

Money Laundering

In one instance, a DAML SAR was submitted by a reporting entity after suspicions were raised that a customer’s student account displayed activity indicative of money muling. One of the main red flags pointing to this money laundering typology was that large funds were being deposited via money service businesses and immediate deposit machines. The same activity was also detected in other customer accounts, with over £45,000 in cash being deposited into the customer’s student account over six months. As a result of the DAML SAR, over £30,000 has been frozen and inquiries are ongoing.

According to Cifas, the UK fraud prevention service, the number of people under 21 bearing the hallmarks of money mule activity is increasing by 78% year-on-year. In 2021, INTERPOL, Europol, and the European Banking Federation identified over 18,000 money mules, leading to the arrest of 1,803 people involved in criminal activities valued at a collective £59.3 million.

Vulnerable Persons

The UKFIU highlights six case studies related to scams targeting vulnerable persons. Across each account, various fraud types often known to exploit elderly and vulnerable persons are noted. These include:

• Romance scams
• Investment fraud
• Courier fraud
• Bank and police impersonation fraud

According to figures released by Action Fraud, £1.7 billion has been lost to elder fraud in the UK since 2019. The statistics reveal that elder fraud is rising, increasing from around 36,000 recorded cases in 2019 to over 57,00 cases in 2022. Financial losses were also at an all-time high in 2022 – with pensioners losing a total of £460 million, up 10 percent from 2021.

In many of the case studies discussed in the booklet, the UKFIU was able to fast-track the SARs to the relevant law enforcement agencies, which led to the arrest and charging of multiple suspects and the return of funds to victims. 

Compliance staff with reporting responsibilities should ensure they know the SAR glossary codes in the booklet relating to incidents that pose a potential risk to vulnerable adults (XXV2XX) and children (XXV3XX).

Fraud and Drugs

In another instance, a DAML SAR was submitted in light of suspicions about money movement in a customer’s business account. The reporting anti-money laundering (AML) officer noted that the transactions were inconsistent with the nature of the business, and they could not determine the source of funds (SoF). After the UKFIU fast-tracked the SAR to the relevant law enforcement agency, it was determined that the account holder had connections to an associate with a history of drug supply and organized crime group activity.

In addition to identifying drug traffickers and organized crime group members, the Head of the UKFIU, Vince O’Brien, said SARs “have been instrumental in identifying sex offenders, fraud victims, murder suspects, missing persons, people traffickers, fugitives, and terrorist financing.”

Key Takeaways

For more information on reporting processes and best practices, compliance staff can review part four of our Compliance Team’s Guide to Customer Onboarding.

Compliance professionals should also review the categorized list of SAR glossary codes at the booklet’s end. More detail regarding reporting routes can be found in the NCA’s June 2022 publication, where firms are reminded that the relevant glossary code should be included in the Reason for Suspicion text space. Particular categories and codes to take note of include: 

• Money laundering:
  • Linked to sanctioned entities: XXSNEXX
  • Through real estate: XXPROPXX
  • Virtual assets (VAs): XXVAXX
  • Trade-based money laundering (TBML): XXTBMLXX 

• Predicate offenses:
  • Tax evasion offshore: XXTEOSXX 
  • Tax evasion UK-based: XXTEUKXX 
  • Proceeds from benefit fraud: XXF1XX
  • Bribery and corruption: XXD9XX 
  • Modern slavery and human trafficking: XXMSHTXX

• Politically exposed persons (PEPs):
  • International PEPs: XXD7XX 
  • Domestic PEPs: XXD8XX