- NCA consent has been obtained; or
- seven working days have expired without a response being received from NCA; or
- consent was refused by NCA but a thirty one day period has expired without notification that law enforcement has taken further action to restrain the transaction.
The receipt of a suspicious report will be acknowledged by NCA and in the absence of any instruction to the contrary, a firm will be free to operate the customer’s account under normal commercial considerations. This acknowledgement however, does not indicate that the suspicion has been investigated or that it is unfounded.
If the enquiries uncover a crime, the investigation will serve a Court Order on the firm to provide the records needed as evidence. NCA will make their own discreet enquiries and their investigation will be confidential. A firm cannot be sued for breach of confidentiality for making a report to NCA.
Where NCA give consent following a disclosure, this provides the staff involved with a defence against a charge of money laundering. It is not intended to over-ride normal commercial judgement and a firm is not committed to continuing the relationship with the customer if such action would place the reporting firm at commercial risk. However, before terminating a relationship the firm should liaise with NCA or the investigating officer to ensure they do not inadvertently “tip off” the customer or prejudice the investigation.
A person guilty of the offence of failure to disclose is liable to a fine or to imprisonment or both. They could also be found guilty of money laundering itself, which has a maximum imprisonment of fourteen years.
It is an offence for any person if they know or suspect a disclosure has been made, to take any action likely to prejudice the investigation, such as “tipping off”.
Recognising suspicious transactions
Firms need to be able to recognise and report suspicious transactions. A person who considers a transaction to be suspicious would not be expected to know the exact nature of the criminal offence or that funds are definitely arising from the crime.
A firm’s knowledge of their customers should help them to decide, taking into account what they know about them and their background, whether the transaction is something unexpected or unusual. This in itself does not necessarily mean it is suspicious, if there is a legitimate explanation.
Examples of factors which may give rise to suspicion:
- A new corporate/trust client where there are difficulties and delays encountered in obtaining copies of accounts or other documents of incorporation, where required.
- A personal lines customer for whom verification of identity proves unusually difficult or who is reluctant to give full details.
- A client using numerous offshore accounts, companies/structures, in circumstances where the client’s needs do not support such economic requirements.
- Any transaction using an undisclosed third party.
- A client who does seem interested in the performance or terms of the contract, but is more interested in early cancellation of the contract.
- Transactions that have no apparent purpose and make no obvious economic sense.
- A request to insure goods in transit to or situated in countries where terrorism, the production of drugs, drug trafficking or organised crime may be prevalent.
- Payment of very large premiums with cash.
- Client purchases a policy which is considered beyond his apparent means.
- Over payment of a premium with a request to pay the excess to a third party.
- Payment in cash when the business transaction would typically be made by cheque, direct debit mandate (DDM) or credit card.
- A client who has always paid by cheque, credit card or DDM suddenly offering payment by cash.
- Unemployed or low paid customers arranging insurances with substantial premiums.
- Assignment of a policy to an unrelated third party.
- Early cancellation of policies in circumstances which generate a large return premium, particularly where they appear unusual or occur for no apparent reason.
- Cancellation and request for the refund to be paid to a third party, especially where cash was tendered.
- Customers who regularly insure against a common risk and make a number of small claims.
- Cancellation of a number of policies taken out by an insured, especially where the premium refund is made to a third party.
- Customers who make a practice of early cancellation.
- Claims paid to persons other than the insured.
- Change of ownership on a policy just before a loss occurring.
In addition to the above, firms should also be able to recognise and report any matters concerning employee fraud.