Suspicious Activity Reports (SAR): When & how to report?

Have you just spotted something suspicious in a client’s transaction? Are you worried about whether you must report it, and what happens if you don’t? Under POCA, failing to report suspicions of money laundering can land you with serious criminal offences and heavy penalties. The rules around reporting to the NCA, dealing with HMRC, and avoiding “tipping-off” are complex and unforgiving. One wrong move could mean prosecution or professional ruin. This article explains when and how to report, what protection you get, and how to stay on the right side of crime prevention laws. If you’re uncertain about your position, consulting a solicitor specialising in regulatory compliance or financial crime is indispensable.

Discover when you must report, how to avoid career-ending offences, and what legal protections shield you from prosecution.

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What are Suspicious Activity Reports?

A Suspicious Activity Report (SAR) is a formal disclosure you must submit when you suspect criminal proceeds, money laundering, or terrorist financing. The purpose is to alert authorities before crime can be concealed or facilitated.

• Legal obligation: The regulated sector, including banks, accountants, solicitors, estate agents, casinos, and high-value dealers, must report suspicions, not certainties. The threshold is reasonable suspicion, not proof.
• Intelligence tool: SARs provide the NCA’s UK Financial Intelligence Unit with critical data to identify criminal networks, freeze assets, and coordinate law enforcement operations.
• Defensive mechanism: Reporting creates a legal defence against offences under POCA, such as acquiring, concealing, or arranging criminal property that could otherwise make you criminally liable.
• Broad scope: Your duty covers all predicate crime, fraud, tax evasion, bribery, corruption, drug trafficking, and even benefit fraud, not merely traditional financial crime.

When must you submit a SAR?

You must report the moment you have reasonable grounds to suspect money laundering or terrorist financing; this is a deliberately low threshold. Courts assess suspicion objectively based on what a reasonable person in your position would think.

• Subjective element: You personally must suspect something doesn’t feel right about the transaction or client behaviour.
• Objective test: Your suspicion must be based on reasonable ground; not paranoia, but not requiring concrete evidence either.
• Knowledge vs suspicion: You don’t need to know crime has occurred; genuine unease about the source of funds suffices.
• Timing matters: The duty arises immediately when suspicion forms; delaying your report can itself constitute an offence.
• No minimum value: There’s no financial threshold; even small transactions require reporting if they raise red flags.

Who receives and processes SARs?

The NCA is the sole UK authority receiving and processing all SARs submitted under POCA and terrorism legislation. Submitting your SAR happens exclusively through the NCA’s secure digital platform; no paper forms or email submissions are accepted.

• The NCA’s SAR Online portal: You must register for access, selecting your reporter type (nominated officer, sole trader, or individual capacity), then complete the standardised form using glossary codes for activities and subjects. If you need permission to proceed with a transaction, tick the DAML consent box to trigger the formal moratorium period.

• Information requirements: Provide complete subject details (names, dates of birth, addresses, identification numbers), precise transaction information (dates, amounts, account details, beneficiary data), and a clear suspicion narrative with supporting evidence. Include any HMRC-related concerns such as tax evasion or VAT fraud.
• Timeframes: Submit your report as soon as reasonably practicable after suspicion forms; typically within hours or days, not weeks. For transactions requiring consent, report before acting and wait for the NCA’s response (seven working days, extendable to 31 days).

The tipping-off prohibition

Tipping-off occurs when you disclose information that might prejudice an investigation into money laundering or crime. Section 333A POCA criminalises this conduct, carrying severe penalties including imprisonment.

• What constitutes tipping-off: Telling the suspect or third parties you’ve submitted a SAR, making comments alerting someone to scrutiny (“I can’t proceed with this transaction”), or discussing your report outside the compliance function. The prohibition applies from when you report until investigations conclude; potentially years.
• Consequences: Up to five years’ imprisonment, unlimited fines, and professional disqualification under section 333A POCA. Tipping-off may also constitute perverting the course of justice, exposing you and your firm to HMRC penalties and collapsed prosecutions.
• Permitted communications: Disclose to your firm’s nominated officer, professional legal advisers for compliance guidance, and cooperate with NCA, HMRC, or police requests. Discussions with compliance teams and explaining delays as “regulatory clearance” after consent are protected under section 333B POCA.

Legal protections for those who report

Reporting suspicious activity under POCA grants you significant legal protections designed to encourage compliance without fear of repercussions:

• Immunity from breach of confidentiality: Section 337 POCA provides absolute protection against civil liability for breaching client confidentiality, data protection laws, or contractual obligations when you report in good faith. Solicitors, accountants, and advisers cannot be sued for reporting suspicions, regardless of whether investigations prove your concerns justified.
• Defence against money laundering charges: Submitting a SAR creates a statutory defence under sections 327-329 POCA against offences of concealing, arranging, or acquiring criminal property. Obtaining NCA consent before proceeding with suspicious transactions protects you even if funds are later proven criminal.
• Employment law safeguards: Whistleblowing legislation (Employment Rights Act 1996) protects you from dismissal, demotion, or retaliation for making protected disclosures about crime. Employers face unlimited compensation claims if they penalise you for fulfilling reporting obligations to the NCA or HMRC.

Penalties for non-compliance

Failing to report suspicious activity carries devastating consequences that extend far beyond financial penalties:

• Criminal sanctions: Section 330 POCA imposes up to five years’ imprisonment and unlimited fines for failing to report suspicions in the regulated sector. Section 331 targets nominated officers with identical penalties. These recordable offences create a criminal record and destroy professional reputations; prosecution doesn’t require proof that crime occurred, only that you failed to report reasonable suspicions.
• Professional and regulatory consequences: Regulatory bodies including the Solicitors Regulation Authority, Financial Conduct Authority, and HMRC impose sanctions from substantial fines to permanent disqualification. Firms face compliance reviews, increased supervision costs, and licence revocation. Professional indemnity insurers may refuse cover for reporting failures, leaving you personally liable for losses.

FAQs

• Can I be prosecuted if my SAR turns out to be wrong? Section 337 POCA protects you from liability when reporting in good faith, even if your suspicions prove unfounded.
• What happens if I discover I should have reported something months ago? Report Late SARs may still provide statutory defences against offences and demonstrate good faith to the NCA and HMRC.
• Do I need to report suspicions about historic crimes that occurred years ago? Yes, if you encounter the proceeds now. POCA doesn’t impose time limits; reporting obligations apply whenever you suspect property represents criminal proceeds.

Reporting suspicious activity under POCA is a legal duty with serious consequences for failure. Knowing when to report, how to avoid tipping-off offences, and what protections you receive ensures compliance while safeguarding your professional future and protecting against crime.

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KEY TAKEAWAYS:

• The regulated sector must report suspicious activity to the NCA when suspecting money laundering or crime; failure brings up to five years’ imprisonment under POCA and professional disqualification.
• Disclosing your SAR to suspects constitutes a criminal offence, though you can communicate with nominated officers, legal advisers, HMRC, and the NCA without restriction.
• Reporting in good faith provides statutory defences against money laundering offences, immunity from confidentiality breaches, and whistleblowing protection, even if suspicions prove incorrect.