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Money laundering, the confidentiality and sensitivity of suspicious activity reports (SARs) and the identity of those who make them

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Money laundering, the confidentiality and sensitivity of suspicious activity reports (SARs) and the identity of those who make them

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Under the Proceeds of Crime Act 2002 (POCA), banks and other businesses in the regulated sector must report any knowledge or suspicion of money laundering to the National Crime Agency (NCA) via Suspicious Activity Reports (SARs)

Disclosure of these reports in certain circumstances can pose a serious risk to public interest, and the identity of those making the reports is a sensitive issue that requires careful handling.

Key Points

  1. Relevance and Sensitivity Assessment:

    • SARs must be evaluated for relevance and potential sensitivity in the context of a criminal investigation.
    • Sensitive SARs could pose a 'real risk of serious prejudice to an important public interest.'
  2. Disclosure Process:

    • Investigators must determine if SARs meet the statutory criteria for relevance and sensitivity.
    • Material relevant to the investigation must be listed on a schedule of either sensitive or non-sensitive material.
    • Non-sensitive material is disclosed to the defence, while sensitive material may require a Public Interest Immunity (PII) application to determine if it can be withheld.
  3. Public Interest Immunity (PII) Applications:

    • If disclosure of a SAR is likely to prejudice a public interest, a PII application is necessary.
    • The court will balance the need for a fair trial against the public interest in protecting the source of the SAR and other considerations.
  4. Disclosing SARs:

    • Disclosure can sometimes be done in a redacted form or through summaries to protect sensitive information.
    • The safety of the reporter and the interests of the disclosing institution must be considered, though they may not always prevent disclosure.
  5. Case-by-Case Assessment:

    • Each SAR must be considered individually, taking into account the risk to the reporter and the relevance of the SAR to the investigation.
    • If a SAR is to be disclosed, the NCA must be notified to manage any potential risks.
  6. Guidance from Legal Precedents:

    • The House of Lords judgment in the case of H&C (2004) provides guidance on PII applications and the CPIA disclosure test.
    • Material that does not undermine the prosecution case or assist the defence is not required to be disclosed.

Civil Proceedings:

  • SARs may also be disclosed in civil proceedings, particularly in cases of civil recovery under POCA.
  • Standard disclosure rules under Part 31 of the Civil Procedure Rules (CPR) apply, allowing for a broader scope of disclosure compared to criminal proceedings.
  • Courts can exercise discretion to limit disclosure if it would prejudice a public interest, using gists or summaries to manage risk to reporters.

Conclusion

The handling of SARs in criminal and civil proceedings involves a delicate balance between the right to a fair trial and the need to protect public interest and the safety of those making the reports. Each SAR must be individually assessed, and where necessary, steps should be taken to redact sensitive information or apply for PII to safeguard the interests involved. This process ensures that justice is served while minimizing potential harm to informants and maintaining the integrity of financial institutions.

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