BTC Challenges HMRC over right to view SAR’s on supervisor compliance visits
HMRC has published its Code of Practice for supervisory purposes for visits to businesses under Money Laundering Regulations (COP28). This Code of Practice tells you what you can expect from HMRC Supervisory staff and what they expect of you when they visit your business under the Money Laundering Regulations 2007.
This is a simple but very helpful document for preparing for a supervisory visit under the Regulations, however one item contained within the documents raised concern for Steve O’Neill of BTC, namely;
Examples of business records the officer is likely to want to see include:
“Records/copies of suspicious transactions, action taken, copies of any Suspicious Activity Reports (SAR’s) submitted to the Serious Organised Crime Agency and any correspondence from them concerning consent. We will look at Suspicious Activity Reports for anti-money laundering legislation purposes only and not for tax purposes”.
It is Steve O’Neill’s (Business Tax Centre’s BTC) understanding that SAR’s are an individual’s obligations covered under the Proceeds of Crime Act and not covered under the Money Laundering Regulations which covers a ‘Firms’ obligations to put into place appropriate policies and procedures for the prevention, detection and reporting of suspicious activity, and not the actual SAR itself which has a subjective test and offences which are covered in PoCA.
When HMRC regulatory team was asked about their powers to view a SAR, they responded by way of reference to two sections of the Regulations. One of these references was to CDD only and the other to refers to the ‘Policy and Procedures’ for reporting.
These correspondences have been passed on to other supervisory authorities who can confirm that their opinion also states that the ML Regulations do not give authority for a supervisor to view a SAR, which should only be done by an accredited and trained financial investigator.
We understand from a response received from these bodies that this subject will be raised with HMRC at the next ‘affinity group’ meeting of accountancy and taxation supervisors.
If HMRC point of view is upheld, then the Treasury approved CCAB guidance and the notes of each professional boy will need to be updated accordingly. We will post updates as we receive them.
Visit the BTC website for compliance help and support for firms in the regulated sector.
