Anti-money laundering

Do I need to make a suspicious activity report if I end a retainer?

I’ve been instructed by a buyer in a complex conveyancing transaction with several high-risk factors. The client’s source of funds evidence has raised suspicions of criminality. I plan to end the retainer on the basis that the matter is high risk. Am I obliged to make a suspicious activity report (SAR)?

Under part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 (TACT), persons in the regulated sector must submit a SAR in respect of information that comes to them in the course of their business if they:

  • know
  • suspect, or
  • have reasonable grounds for knowing or suspecting

that a person is engaged in, or attempting, money laundering or terrorist financing.

The failure to disclose offences carry a maximum penalty of five years' imprisonment, a fine or both.

Irrespective of whether you end the retainer or not, in order to avail yourself of a defence under section 330 of POCA, you must make an internal SAR to your money laundering reporting officer (MLRO) as soon as practicable on forming knowledge or suspicion of money laundering where this points to:

  • knowledge of the identity of the launderer or the whereabouts of the criminal property, or
  • a belief that the information on which the suspicion is based may help to identify the launderer or the whereabouts of criminal property

See chapter 16.7 of the Legal Sector Affinity Group's anti-money laundering guidance for the legal sector for guidance on what constitutes suspicion.

If you’re unsure you have such a suspicion, you should promptly seek guidance from your MLRO.

Your MLRO should consider the information and decide whether a SAR under section 331 of POCA should be submitted.

If the MLRO decides not to submit a SAR – for example, because the information does not meet the threshold for suspicion, or is subject to privilege or an exception applies – they should demonstrate compliance by:

  • documenting the reasons for their decision
  • keeping records of this along with the original internal disclosure

For more information, see the anti-money laundering guidance for the legal sector.

Disclaimer

While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.


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