Professional clearance and tipping off.

If an accountant submits a SAR for a client, they can't tell the client, lest they commit a tipping off offence.

If the client changes accountant, the outgoing accountant should receive a letter of professional clearance. I would have thought it's only fair to inform the new accountant that there are issues (it's a bit rough on them if you can't).

a) Is it acceptable to say "We do know of professional reasons why you might wish to decline this appointment, but due to the Money Laundering Regulations we are prevented from giving you details."? Or can you out and say "We submitted a SAR for this client."?

b) If it is appropriate to inform the new accountant that there was a MLR issue, and if, accidentally or otherwise, the client found out from the new accountant, has a tipping off offence been committed? If so, was it by the old accountant (who presumably would only have mentioned MLR issues if this is acceptable in a professional clearance letter and would have assumed this information would be kept confidential), or was it by the new accountant?

Thank you.

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davidwinch's picture

Technical and practical answers

davidwinch | | Permalink

There are two answers to this - a technical answer and a practical answer.

TECHNICAL ANSWER

A tipping off offence occurs where you tell someone that a money laundering report has been made to the firm's MLRO or to the authorities (normally in the form of a Suspicious Activity Report to SOCA) - see s333A Proceeds of Crime Act 2002.

However you are allowed to tell someone about a report in certain circumstances. You are allowed, if you are an accountant who satisfies the criteria of a 'relevant professional adviser', to tell another accountant (who also meets those criteria) for the purpose of preventing a money laundering offence and in the course of giving professional clearance information.  Essentially this means that the telling and the listening accountants each have to be members of appropriate professional bodies - s333C and s333E(5) PoCA 2002.

So the technical answer is that - if the conditions are met - you can tell the new accountant that you have submitted a SAR.

PRACTICAL ANSWER

In practice I would not tell a new accountant that I had submitted a SAR.  But I would only have submitted a SAR if I had information which had given rise to a suspicion.

There is no legal bar on passing on to the new accountant (or to every Tom, Dick & Harry you meet - except that it would be a breach of client confidentiality) all the information you have received which gave rise to your suspicion.  I would tell the new accountant all of this (unless I suspected him to be a dodgy geezer himself!).

But I would not add, " . . . and I have submitted an SAR to SOCA about this".  There is no need to tell the new accountant this (he will probably guess it anyway - that's no problem).

If the new accountant asked me whether I had submitted a SAR I would reply along the lines of, "It is not the firm's policy to comment on whether a SAR has been submitted in relation to any person.  However we are fully aware of our legal responsibilities in relation to suspected money laundering and we comply with those responsibilities".

David

www.MLROsupport.co.uk

Monsoon's picture

Thanks David

Monsoon | | Permalink

Thanks David, that's a really helpful response :)

(sorry for the delay, I don't check AWeb that often!)

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