Speed Read: Jonathan Fisher QC provides an overview of the new shared information regime in the Criminal Finances Act 2017 and discusses the implications for professionals.
Solicitors, accountants, bankers, and other professionals will be interested in the provisions contained in the Criminal Finances Act 2017 which relate to information sharing and the making of joint disclosure reports, likely to be known as “super-SARS”. The rationale underlying the sharing of information is that where information has been shared, the interested parties will be able to present to the National Crime Agency (NCA) a holistic rather than a piecemeal delivery of criminal intelligence.
The criteria for information sharing is strict. First, the person sharing information must be operating in the regulated sector. The information shared must have come to the person sharing information whilst carrying on the regulated sector business, and the person to whom the information is to be disclosed to is also carrying on business in the regulated sector (though not necessarily the same kind of business). Secondly, the person to whom the information is disclosed has requested the person sharing information to make the disclosure. Thirdly, before the person sharing information makes the disclosure, he must notify the NCA that he wishes to share information. Fourthly, the person sharing information must be satisfied that the disclosure will or may assist in determining any matter about a suspicion that a person is engaged in money laundering. Once these four conditions have been satisfied, a person may disclose information to the person sharing information where he has reason to believe that the person sharing information has in his possession information that will or may assist in determining any matter in connection with a suspicion that a person is engaged in money laundering.
A request for disclosure must state that it is made in connection with a suspicion that a person is engaged in money laundering. In addition, the request must identify the person, describe the information that is sought, specify the person(s) to whom the information will be disclosed, set out the grounds for the suspicion that a person is engaged in money laundering, and provide information to enable the recipient of the request to determine whether the information ought to be disclosed.
After sharing of information has taken place, a joint disclosure report by two or more regulated sector businesses may be made to the NCA pursuant to the reporting obligations contained in sections 330 and 331 of the Proceeds of Crime Act 2002. The nominated officer of each business involved in sharing information must approve the joint disclosure report. The report must be made within 28 days of the date when the NCA was notified that a disclosure of information had been made.
It will be interesting to see whether solicitors, accountants, and bankers embrace this opportunity for information sharing. On the one hand, there is a significant advantage to parties forming a joint position on the question of whether a SAR needs to be made. Information sharing should assist in determining whether there is a suspicion that criminal property is involved in a transaction, and the scope for clients to “divide and rule” between their professional advisers becomes more limited. A professional person would no longer be left with a residual concern that by making a SAR, or indeed not making a SAR, he has made the wrong decision in circumstances where his professional counter-party has taken a different view. On the other hand, the procedure to be followed for information sharing is cumbersome and may lead to delays in the furthering a transaction, at a time when the client is looking for speedy action. Delay could even precipitate litigation by the client against his professional adviser or bank.
Moreover, the Act makes clear that the prospect of information sharing does not remove any requirement to make a SAR in relation to anything which is presently known. In these circumstances, is it possible that, contrary to the NCA’s expectation, professional advisers may shy away from information sharing, preferring to take the view that it is less hassle to file a SAR and await statutory consent to proceed? In most cases, consent to proceed is likely to arise within seven days of the SAR being filed.
Note: A version of this article first appeared in the Lloyds Law Reports, Quarterly Commentary written by Jonathan Fisher QC, accessible from here.