Suspicious Activity Reports and Tipping Off: A Guide for Solicitors

A Suspicious Activity Report (SAR) is the disclosure a law firm makes to the National Crime Agency (NCA) when someone in the firm knows or suspects that a client, transaction or matter involves money laundering. Getting SARs right — and understanding the separate criminal offence of "tipping off" a client that a report has been made — sits at the centre of every firm's anti-money laundering (AML) obligations. Get it wrong, and the risk runs from a Solicitors Regulation Authority (SRA) enforcement action to a criminal conviction for the fee earner involved. This guide sets out what fee earners and Money Laundering Reporting Officers (MLROs) need to know in practice.

What is a Suspicious Activity Report?

A SAR is a report made to the NCA's UK Financial Intelligence Unit (UKFIU) disclosing known or suspected money laundering, or (under the parallel terrorism financing regime) known or suspected terrorist property. In a law firm, SARs are made internally first: a fee earner who forms a suspicion reports it to the firm's nominated officer, almost always the MLRO, who then decides whether an external SAR needs to go to the NCA.

The legal basis sits in Part 7 of the Proceeds of Crime Act 2002 (POCA), with an equivalent regime for terrorist property under the Terrorism Act 2000. Firms in the "regulated sector" — which includes independent legal professionals carrying out relevant work such as conveyancing, company formation, and managing client money or assets — are caught by these provisions whenever they are acting in scope of the Money Laundering Regulations.

When does the duty to report arise?

Under POCA 2002, a person in the regulated sector commits an offence under section 330 if they know or suspect, or have reasonable grounds for knowing or suspecting, that another person is engaged in money laundering, and they fail to disclose that suspicion as soon as practicable. Outside the regulated sector, the equivalent offence under section 332 requires actual knowledge or suspicion, without the "reasonable grounds" objective limb.

The threshold for suspicion is deliberately low. As the Law Society's guidance and NCA materials make clear, suspicion is "a possibility, which is more than fanciful" that the relevant facts exist — it does not require proof, or even a firm belief. That said, an individual fee earner's unease does not itself trigger a SAR: it is the MLRO (or their deputy) who must independently review the concern, form their own judgment, and decide whether to submit a report to the NCA. Simply passing a worry up the chain and forgetting about it is not enough — the firm needs a clear, documented decision at MLRO level either way.

Common triggers fee earners should watch for include unexplained or convoluted source of funds, transactions with no obvious commercial rationale, third-party payments from unconnected parties, reluctance to provide identification or corporate structure information, and instructions that change abruptly once questions are asked. Firms should build these into onboarding and ongoing source of funds and wealth checks so suspicion is spotted early rather than after funds have moved.

The tipping off offence explained

Tipping off is a separate, specific criminal offence under section 333A of POCA 2002, applying to those in the regulated sector. It is committed where a person discloses that a SAR has been made, or that a money laundering investigation is being contemplated or carried out, and that disclosure is likely to prejudice any investigation that might follow. A closely related offence — "prejudicing an investigation" under section 342 POCA — applies more broadly, including outside the regulated sector, where someone knows or suspects an investigation is underway and does something likely to prejudice it, such as destroying relevant documents.

According to the Law Society's guidance, tipping off under section 333A carries a maximum penalty, on conviction on indictment, of two years' imprisonment or a fine (or both); on summary conviction, up to three months' imprisonment or a level five fine (or both). These are criminal penalties attaching to the individual, separate from any SRA regulatory sanction against the fee earner or the firm.

Crucially, tipping off does not require an intent to help the client evade justice — it can be committed inadvertently, for example by a fee earner explaining to a client why a transaction has stalled, or why the firm suddenly needs more information about the source of funds, if that explanation would let the client work out that a report has been made. The Law Society is explicit that simply telling a client "we can't proceed for compliance reasons" can, in context, amount to tipping off if it reveals enough for the client to infer a SAR is in play.

A limited exception exists under section 333D: disclosure made for the purpose of dissuading a client from proceeding with criminal conduct, or disclosure between certain institutions and professionals within the same regulated group, may fall outside the offence — but this is a narrow carve-out and should never be relied on without first taking advice from the MLRO or MLCO (Money Laundering Compliance Officer).

The equivalent terrorism financing offences sit in the Terrorism Act 2000: section 21A creates a failure-to-disclose offence in the regulated sector, and section 21D creates the parallel tipping off offence, with the general effect — a fee earner suspecting terrorist property is subject to broadly the same disclosure duty and the same tipping off risk as under POCA.

Handling suspicion within the firm: practical steps

• Report internally, immediately. Use the firm's internal SAR form or reporting line to notify the MLRO as soon as suspicion forms — do not wait for a "convenient" moment, and do not attempt to investigate the client yourself.
• Stop talking to the client about it. Do not explain delays, ask leading questions about the concern, or change your approach to the matter in a way that signals something is wrong. Continue routine work and communication as normal wherever possible.
• Do not tell colleagues who don't need to know. Restrict discussion of the suspicion to those with a genuine need to know — typically the MLRO, MLCO, and any supervising partner bound by the same confidentiality duty.
• Let the MLRO decide on filing and on continuing to act. Whether to submit a SAR, whether to request a Defence Against Money Laundering (DAML) — formerly called "appropriate consent" — and whether the firm can continue acting are all decisions for the MLRO, informed by legal advice where needed.
• Keep the file separate from the SAR record. Firms typically keep SAR-related documentation apart from the main client file, both to protect confidentiality and to avoid inadvertent disclosure if the client (or their new solicitors) later inspects the file.

Consent and DAML requests

Where a firm needs to do something with client money or property that would otherwise itself amount to a principal money laundering offence — for example, completing a transaction using funds that are suspected proceeds of crime — it can seek a Defence Against Money Laundering (DAML) from the NCA. Under current NCA guidance, the NCA has seven working days to respond to a DAML request; if consent is refused (or simply not given), a 31-calendar-day moratorium period follows, during which the prohibited act cannot take place while law enforcement considers further action. Firms should build these timeframes into client care letters and matter planning, since a DAML request can materially delay completion — again, without being able to explain the real reason to the client.

Ireland: a brief note

Ireland operates an equivalent regime under its own anti-money laundering legislation, with SARs made to An Garda Síochána and the Revenue Commissioners rather than the NCA, and its own tipping off provisions. The underlying principles — a low suspicion threshold, a duty to report through a nominated officer, and a separate criminal offence for tipping off — are broadly similar, but firms operating in Ireland should verify the current detail (reporting bodies, deadlines, and penalties) against the Law Society of Ireland's AML guidance rather than assuming the England & Wales position applies directly.

FAQs

Can I tell a client we've filed a SAR if they ask directly?

No. Confirming, denying in a way that implies confirmation, or giving enough detail for the client to work it out can all amount to tipping off under section 333A POCA 2002, regardless of intent. If a client asks directly, escalate to your MLRO or MLCO before responding.

What's the difference between the MLRO and the MLCO?

The MLRO (Money Laundering Reporting Officer) is the nominated officer who receives internal disclosures and decides on external SAR filings. The MLCO (Money Laundering Compliance Officer) is responsible for the firm's overall AML compliance framework and oversight. In smaller firms the same person often holds both roles, but the SRA expects the responsibilities to be clearly documented either way.

Does filing a SAR mean I have to stop acting for the client?

Not automatically. The Law Society's guidance notes that making a report does not necessarily mean all work on the file must stop — but continuing to act requires careful judgment, usually led by the MLRO, about what work can proceed without prejudicing any investigation or breaching the tipping off provisions.

What training should fee earners have on this?

Every fee earner in the regulated sector needs role-appropriate AML training, refreshed regularly, covering the suspicion threshold, internal reporting lines, and tipping off risks specifically — not just generic AML awareness. See Learnsignal's guidance on AML training requirements for solicitors and law firms for what the SRA expects firms to deliver.

SARs and tipping off sit at the sharpest edge of AML compliance precisely because the consequences of getting either wrong — under-reporting suspicion, or over-sharing with a client — carry real criminal and regulatory exposure. Clear internal reporting lines, a well-briefed MLRO, and disciplined fee earners who know when to stop talking are what keep firms on the right side of both offences. For structured, verifiable training on this and related obligations, see Learnsignal's CPD courses.