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HMRC internal manual

Money Laundering Regulations: Compliance

Compliance visit tests: monitoring suspicious activity reports: Reporting suspicious activity to the Serious Organised Crime Agency

It is also important to draw a distinction between suspicious activity within the business and suspicious activity by the customers of the business.

This includes suspicion of any of the following:

  • An offence under Part 7 of the Proceeds of Crime Act 2002
  • An offence under Section 18 or 21A of the Terrorism Act 2000 (as amended by Anti-terrorism, Crime and Security Act 2001)
  • Wider criminality such as fraud, conspiracy or suspicion of non-financial crime such as people, drug trafficking or child abuse.

The courts have defined suspicion as being beyond mere speculation, being based on some foundation. Although the creation of suspicion requires a lesser factual basis than the creation of a belief, it must nonetheless be built upon some foundation. You may consider an activity to be suspicious without knowing the exact nature of an offence. It can be ‘a reasonable but unsubstantiated doubt or concern.

In Shaaban Bin Hussein v Chong Fook Kam (1970) AC942, at 948, Lord Devlin said:’ Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is lacking: I suspect but I cannot prove’. A belief is based on solid grounds or evidence although not necessarily substantiated

Regulation 24 (2) says a supervisory authority which, in the course of carrying out any of its functions under these Regulations, knows or suspects that a person is or has engaged in money laundering or terrorist financing must promptly inform the SOCA.

Regulation 24 (3) says that a disclosure made under paragraph (2) is not to be taken to breach any restriction, however imposed, on the disclosure of information.

This does not extend to disclosures about customers of the business. If in the course of a compliance visit an Officer identifies what may appear to be a suspicious transaction or suspicious activity this may be indicative that the risk based controls are inadequate. Under these circumstances the NO should be asked why the occurrence was not considered suspicious and how this was risk assessed. If there has been a failing of the risked based approach then the business should submit a SAR retrospectively and an undertaking should be reached on how to improve the process.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) This should include all relevant information and be marked urgent. Officers must not try to obtain additional information about the customer of the business. .The circumstances when a report should be made are explained in more detail in our MLR1 guidance

Officers must also be clear about the distinction between the circumstances when a Criminal Investigation is being considered for a breach of the Regulations and where there is suspicion of a primary money laundering offence. See our MLR1 guidance for more details.