FAQs: Reporting AML breaches

I am the MLRO at a high street conveyancing practice. Unfortunately, my firm has been subject to criminal fraud linked to money laundering. Following an internal investigation, I suspect a member of staff may have committed the fraud.

My insurer has told me to report the matter to the police and obtain a crime reference number. I have already sent a Suspicious Activity Report (SAR) to the National Crime Agency (NCA). Will this suffice in terms of satisfying my insurer that I have notified the matter to the police?

No. The filing of a SAR with the NCA does not amount to filing a crime report. The NCA does not accept or process crime reports. You will need to report the matter to Action Fraud, the national police body responsible for collating allegations of fraud. If Action Fraud is satisfied that the allegation requires further investigation, it will issue you with a crime reference number and file a report with the National Fraud Intelligence Bureau who will liaise with your local police force to instigate a criminal investigation.

You may file your initial report with Action Fraud online here. Alternatively, you can report the matter by telephone on 0300 123 2040.

If you file a SAR after having obtained a crime reference number from Action Fraud, you should include this in the space provided in the SAR form which should be filed online here. Also, the firm’s Compliance Officer for Legal Practice (COLP) would be under an obligation to self-report this matter to the SRA at report@sra.org.uk

I am a Money Laundering Reporting Officer (MLRO) and have recently reviewed a file which was dealt with by a junior solicitor, where we acted for a buyer who bought a house for cash. The transaction has now completed and the bill has been paid by the client. The junior solicitor was aware that the client was in receipt of benefits and has no legitimate source of income. The file disclosed no further source of funds enquiries and the fee earner accepted payment of his bill in cash, despite having a suspicion that the cash may have been the proceeds of crime.

The junior fee earner was told by his head of department that he could accept the cash payment for his bill as the provision by him of the conveyancing services amounted to adequate consideration, and that therefore his conduct is covered by the adequate consideration defence. Was the advice of the head of department correct?

The advice may well have been incorrect. It is highly probable that the junior fee earner was suspicious about the house purchase transaction. If that was the case, then completing the house purchase may amount to an offence under section 328(1) of the Proceeds of Crime Act 2002 which provides that:

“A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person.”

In addition, the adequate consideration defence could not apply to payment of the bill of costs if the fee earner suspects that the services have helped the client to carry out criminal conduct. For further information on the adequate consideration defence and on the importance of ensuring that internal compliance procedures are adhered to please see the Legal Sector Affinity’s Group Anti-money laundering guidance here.