Tipping off
Also called prohibition of disclosure
Tipping off is disclosing that a suspicious activity report has been filed, or that a money laundering investigation is under way, in a way likely to prejudice it. In the UK it is a criminal offence for staff in the regulated sector. EU and US rules impose similar confidentiality duties on banks and other obliged firms.
How it works
Once a member of staff or the MLRO reports a suspicion, the firm keeps the report confidential. Customer-facing teams receive scripts for handling questions about delayed payments or frozen accounts, so they neither confirm nor deny that a report exists. Access to SAR records is restricted, and case notes on customer files avoid any reference to a filing.
The offence protects investigations by law enforcement. A customer who learns of a report can move funds, destroy records or warn associates. In the UK the maximum penalty is two years in prison, a fine or both. The rules also create a practical tension for firms, which must keep serving customers while saying nothing about the suspicion behind a delay.
The rules
Makes it an offence to disclose a Part 7 report or an investigation where the disclosure is likely to prejudice an investigation.
People working in the UK regulated sectorBars obliged entities from telling customers or third parties that a suspicious transaction report or analysis is under way, with set exceptions.
EU obliged entities, their directors and employeesProhibits a financial institution and its officers from notifying any person involved in a transaction that it has been reported as suspicious.
US financial institutions and their staffCommon questions
Is tipping off a criminal offence in the UK?
Yes. Section 333A of the Proceeds of Crime Act 2002 makes it an offence for people in the regulated sector. The maximum penalty on indictment is two years in prison, a fine or both. A parallel offence for terrorist financing sits in section 21D of the Terrorism Act 2000.
Can a firm tell a customer why a payment is delayed?
A firm can explain that a payment is under review without referring to a suspicion or a report. UK guidance encourages neutral wording. The offence turns on whether the disclosure is likely to prejudice an investigation.
Are there exceptions to tipping off?
Yes. UK law permits certain disclosures between group companies, between regulated firms dealing with the same customer and to supervisors. Lawyers may also try to dissuade a client from an offence. EU rules set out similar exceptions.
