The National Crime Agency has issued a notice stating that, from 15 September, a suspicious activity report requesting consent to continue with a financial transaction that fails to contain the reasons for suspicion or a statement regarding criminal property will be rejected. The reporter will be sent a notification letter setting out the reasons why the submission has been rejected.

If suspicion still remains, the reporter is obliged to make a new report (that is complete and stands on its own rather than referring back to the first report) before the prohibited act takes place, and to seek the relevant consent to avoid liability for the primary money laundering offences under the Proceeds of Crime Act 2002.

A copy of the notice is available. http://bit.ly/1qFGx69

Important notice:

From 15 September 2014 disclosures that omit either the reasons for suspicion or a statement regarding criminal property will be rejected.

The reason for the change is that the poor quality of consent SAR disclosures is impacting the statutory notice period of seven working days to decide to grant or refuse consent.

When a disclosure is rejected the reporter will be sent a notification of closure letter outlining the reasons why the submission has been rejected.

If suspicion in relation to the matter remains, the reporter is still under a legal obligation to make the disclosure before the ‘prohibited act’ takes place; and to obtain the appropriate consent, to avoid liability in relation to the principal money laundering offences under POCA 2002. Therefore, a new disclosure, that is able to stand alone, will have to be submitted.

For further information please read ‘Closure of cases requesting consent’. http://bit.ly/1skUkzt

Authorised disclosures

The Proceeds of Crime Act 2002 (POCA) allows reporters a defence against a money laundering offence by seeking the consent of the NCA to undertake an activity which the reporter suspects may constitute one of the three money laundering offences (Sections 327-329) i.e. a “prohibited act”. This is done by submitting an ‘authorised disclosure’.

An authorised disclosure (Section 338 of POCA) is made:

• before a person carries out the act prohibited by Sections 327-329
• while a person is carrying out the act prohibited by Sections 327-329, the act having begun at a point when the discloser did not know or suspect that the property is the proceeds of crime and the disclosure is made on the discloser’s own

initiative as soon as is practicable after s/he first knew or suspected that the property is the proceeds of crime, or

• after the act prohibited by Sections 327-329 and is made on the discloser’s own initiative as soon as practicable after the act, and there is good reason for failure to make the disclosure before the act.

As a result of consent requests, the NCA can often identify asset recovery or asset denial opportunities for itself and partner agencies. Decisions are made by the Consent Team of the UKFIU on behalf of the NCA, who work in close cooperation with Law Enforcement Agencies (LEAs) and other partners when arriving at a decision as to whether or not to grant consent.

Where consent is granted the reporter may proceed with the specified transaction. If they choose to do so they will have a defence against the three principal money laundering offences relating to that activity.

Consent for the purposes of Part 7 of POCA does not:

• oblige or mandate a reporter to undertake the proposed act
• imply NCA approval of the proposed act
• provide a criminal defence against other criminal offences pertaining to the proposed act
• provide derogation from professional duties of conduct or regulatory requirements
• override the private law rights or any person who may be entitled to the property specified in the disclosure.

All consent requests are treated as a priority within the NCA. The aim is to provide the quickest possible response to a reporter, but some decisions to consent requests will take longer than others. As soon as a decision is made it is relayed to the reporter without delay. The NCA always makes the final decision in relation to granting or refusing consent.

Timeframe

The UKFIU is required to reach a decision within strict timescales set down in legislation, within the agreed NCA policy, and within the requirements of the Home Office Circular on Consent (029/2008).

1) The ‘notice period’ (7 working days)

The law specifies consent decisions must be made within seven working days (the ‘notice period’) from the day after receipt of the consent request (excluding Bank Holidays and weekends). The purpose of the seven days is to allow the NCA and its law enforcement partners time to risk assess, analyse, research and undertake further enquiries relating to the disclosed information in order to determine the best response to the consent request. The reporter runs the risk of committing a money laundering offence if they proceed prior to receiving a decision from the NCA.

If nothing is heard within that time, the reporter may proceed with the specified transaction or activity and will have a defence to any potential money laundering offences relating to that activity.

2) The ‘moratorium period’ (31 calendar days)

If consent is refused within the seven working days, law enforcement has a further 31 calendar days (the ‘moratorium period’) – from the day of refusal – to further the investigation into the reported matter and take further action e.g. restrain or seize funds. The 31 days includes weekends and public holidays. The reporter runs the risk of committing a money laundering offence if they proceed during the moratorium period whilst consent is still refused.

If no restraint or seizure action occurs after the end of the 31 day period, the reporter can proceed with the transaction or activity and will have a defence to any potential money laundering offences relating to that activity. Consent does not extend to any acts/criminal property not detailed in the initial disclosure or agreed with the NCA.

Notification of consent

In the first instance, a consent decision will usually be communicated to the reporter by telephone in order to provide the quickest possible response. The NCA will also send a letter by post recording the decision but there is no requirement to wait for this letter to proceed with the prohibited act if consent has been granted verbally.

The NCA is mindful of the sensitivity of SARs – even within the same organisation – and endeavours to communicate only with persons whose details are verifiable by the NCA. Reporters may wish to appoint a specified deputy to deal with decisions relating to the consent request in their absence to avoid delays.

Details of reporters/Money Laundering Reporting Officers (MLROs) and their deputies, including direct telephone numbers, should be registered with the NCA.

Registration is available through SAR Online or manually How to report SARs.

Submitting a request for consent

Reporters are encouraged to make consent requests using SAR Online, the free, secure and efficient means of submitting SARs to the NCA. SAR Online contains useful information on making a disclosure and has links to relevant legislation. You will receive an automatic acknowledgment of your SAR and the NCA financial database unique reference number for the report. The Consent Team will also be able to start processing SAR Online submissions quicker than those submitted manually.

In exceptional circumstances where reporters are unable to use SAR Online, they should fax their disclosure requesting consent to 020 7238 8286. In this instance reporters are encouraged to use the NCA’s preferred standard forms, which can be downloaded here.

Important:

Regardless of the method of disclosure, reporters should ensure they:

• tick the ‘Consent Required’ option
• tick the option to indicate whether they are disclosing through POCA or the Terrorism Act 2000 (TACT)
• identify as clearly as possible the suspected benefit from criminal conduct (the ‘criminal property’) including, where possible, the amount of benefit
• identify the reason(s) for suspecting that property is criminal property
• identify the proposed prohibited act/s they seek to undertake involving the criminal property
• identify the other party/parties involved in dealing with the criminal property including their dates of birth and addresses where appropriate (such information should be held routinely by reporters in the regulated sector to comply with the requirements of the Money Laundering Regulations.

Issues of quality in SARs affect the NCA’s ability to prioritise and process the report promptly and law enforcement’s decision or ability to investigate and/or grant consent. Ultimately, this affects the reporting sector, as consent can be delayed causing face-to-face problems with your client/customer/supplier and the possibility of a civil suit.

Reporters should not submit disclosures requesting consent through the post as this may delay the decision being relayed to the reporter. Where reporters have submitted a consent disclosure electronically or via fax there is no requirement to post a duplicate report.

Further information on consent can be found in the UKFIU publication ‘ Obtaining consent from the NCA’. http://bit.ly/1rHMAU3