New suspicious transaction reporting rules risk delays to deals, says expert

New suspicious transaction reporting rules risk delays to deals, says expert
New suspicious transaction reporting rules risk delays to deals, says expert

Extending the length of time law enforcement agencies have to investigate suspicious transactions to as long as six months could put deals at risk, an expert has warned.


The Criminal Finances Bill, which has just been introduced to the UK parliament, would extend the so-called moratorium period under the suspicious activity reports (SAR) regime. If passed in its current form, the legislation would allow law enforcement to request a further 186 days to complete their investigations on receipt of an SAR, during which time any activity would have to be put on hold.

Corporate crime expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, described the change as “an ill thought through proposal at a time when government should be doing everything it can to encourage commerce in the UK”.

“Businesses already struggling with Brexit uncertainty would be faced with a six month wait to do deals while police work out what to do under the proposals,” he said, writing on his blog thebriberyact.com. “They may decide to go elsewhere in Europe to do those deals.”

“The rules which already apply for up to a month already cause serious tensions as banks and advisers can be in the position of being required to stall a transaction with an increasingly irate customer seeking an explanation which the bank or adviser can’t give. This proposed change highlights once again that our cash strapped law enforcement agencies are woefully underfunded to be able to do the job,” he said.

“Unfortunately the government response is to legislate to give the police more time, instead of grappling with the real issue: a complete lack of funding. The victims in this are business and individuals,” he said.

The SARs regime was created under the Proceeds of Crime Act. It requires ‘regulated’ entities such as banks, accountants and law firms to report suspicions of money laundering to the National Crime Agency (NCA). The rules apply to transactions of all sizes, from house purchases to corporate mergers and acquisitions. Once a report is filed, the deal must be put on hold until consent to proceed with future work is received from the NCA.

The Criminal Finances Bill sets out a range of new measures to strengthen anti-money laundering and corruption laws, recover the proceeds of crime and counter terrorist financing. They include the creation of unexplained wealth orders (UWOs), new seizure and forfeiture powers covering a wider range of assets for law enforcement and a new criminal offence aimed at companies that fail to prevent tax evasion by their employees and representatives.

UWOs, backed by linked civil forfeiture powers, will require individuals suspected of serious criminality to explain the origins of their wealth or face civil recovery action. Law enforcement agencies would be able to apply to the High Court for permission to put one of the new orders in place. The bill would also extend the disclosure order regime to cover money laundering and terrorist financing cases, and allow regulated bodies to share a wider range of information between each other.

Leave a Reply

Your email address will not be published. Required fields are marked *