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Bounce back loan fraud

Does this call for submssion of an SAR?

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If a client applies for and receives a bounce back loan, on the application the purpose of the loan is listed as business reasons, however, you suspect it is in fact for a personal reason (help with house purchase, home improvements etc), would you send a SAR?

Lying on a bank loan application is a crime so I would say most would report this. Or would you only report if it was definitively known, the client may mention the intention or you can see the funds removed from the business immediately?

Thanks

Posted as Anon due to potential AML issue

 

 

 

 

Replies (9)

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By johnt27
17th Jul 2020 16:47

Yes, you're obliged to report suspicions even if they turn out to be wrong, but that's not your concern.

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By jonharris999
17th Jul 2020 17:01

Perhaps.

But a limited co which meets the criteria of eligibility can pay its salaries with a BB loan, and is not under any obligation to monitor its employees' Tesco trolleys to ensure that they are only buying bog-roll and not caviar.

Doesn't it follow that if a sole trader's business is eligible for a BB loan, and one of the business' costs which it will be used to meet is their own drawings, then what those drawings are used for is irrelevant?

I may have exaggerated to prove my point. It's Friday.

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By Paul Crowley
17th Jul 2020 17:07

Company or self employed?
If self employed where did money go?
How much real suspicion, how much guesswork?

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By Paul Crowley
17th Jul 2020 17:28

Was it a fraudulent knowing application or have business needs subsquently changed?

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By pauld
17th Jul 2020 17:30

Get a life !

Thanks (4)
RLI
By lionofludesch
17th Jul 2020 17:34

If you don't have more evidence than a gut feeling, nothing will happen anyway.

But - certainly salve your conscience if you wish. If nothing else, it looks good on your annual return. Zero every year looks liked you're not doing your Government imposed slave labour job.

Thanks (1)
Kirsty image
By Kirsty McGregor
18th Jul 2020 08:21

I ask the same question as poster above - ltd company or unincorporated?
If ltd co, the loan can be used for a ‘normal’ level of wages/divs & what the employee/director does with their own earnings is up to them. If they’ve suddenly taken a £40k bonus or dividend, that’s a problem.

The same goes for sole traders but it’s much more difficult to prove as earnings can be so volatile from year to year anyway.

But certainly if there was a huge jump in divs or wages (or overdrawn directors loan account) I would file an SAR.

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By WallyGandy
21st Jul 2020 11:37

Let it develop. You're a tad early. When next accounts are in preparation, pay attention to what happened to the funds. Thin ice if limited company, but if sole trader, track of funds more straightforward. Then use your best judgment.

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David Winch
By David Winch
21st Jul 2020 11:59

The way I would look at this would be to ask myself 'Do I suspect there has been either a dishonest fraudulent representation by the applicant for the loan, or a dishonest failure to disclose information which he is under a legal obligation to disclose?'.
I have in mind here sections 2 & 3 Fraud Act 2006.
So a fraudulent representation means one which is untrue or misleading, and the person making it knows that it is, or might be, untrue or misleading.
If the application simply asks if the business has suffered adverse financial effects as a result of COVID - and it has - then there is no offence in applying for the loan & using the monies on whatever.
If the application asks what the money will be used for & the applicant says to pay staff wages - but he uses it to buy himself a new car then I would view that as a fraudulent representation.
It all depends on what the applicant has put on the form and what information he was legally required to provide.
David

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