“Tipping off” is an important concept in anti-money laundering (AML) rules and regulations. It’s also a criminal offence that can lead to prison time.

Despite this, many people who work in financial services do not fully understand what tipping off means and in trying to avoid it, they unintentionally provide a poor experience for customers.

Customer facing teams at banks and fintechs fear that tipping off means sharing information with someone suspected of criminal activity. As a result, when a customer gets flagged by law enforcement, they immediately shut down and halt any form of communication with that customer in order not to “tip them off”. This break in communication can be avoided in most cases.

In this blog, we explain what tipping off means, and share some tips on how to avoid tipping off a customer under investigation even while providing a great customer experience.

What is tipping off?

Tipping off, according to the UK Proceeds of Crime Act 2002, is a criminal offence which involves sharing information with an individual or organisation that makes them aware of a potential or ongoing investigation by law enforcement agencies into their activities. For tipping off to occur, the information shared should impact or prejudice the investigation.

The Proceeds of Crime Act 2002 also says that a person found guilty of tipping off may be sentenced to up to two years in prison, paying a fine, or both. This is why it’s important that all employees at banks and fintechs understand what it is, how to avoid it and how to support customers under investigation.  

If an account has been flagged as “under investigation”, law enforcement may instruct the bank or fintech to leave the account running. In this case, the account can be serviced as normal. Information such as account balances, statements and transaction history among others can still be shared with the customer. Tipping off will only happen here if you reveal to the customer that the account is under investigation. Deliberately withholding information that does not endanger the investigation can be detrimental. This often leads to more complex questions from the customer, creating situations where tipping off is more likely to occur.

On the other hand, there are instances when instructions from law enforcement may involve an outright account closure, hold or seizure of funds in the account under investigation. These requests are often inclusive of directions on what can be shared with the customer. Fintechs and banks should follow guidance received from the authorities and ensure only the right people have access to the suspicious account and can contact the customer directly.

If a customer of a bank or fintech is being investigated, information about the investigation must be limited to those relevant to the investigation‍—‌MLROs, nominated persons, financial crime staff etc. In short, designing your controls in a way that information about financial crime investigations is only accessible by those trained to understand it reduces the likelihood of a breach that leads to tipping off.

Best practices to avoid tipping off a customer

• Treat all customer information as sensitive. When in doubt on what to share with a customer, seek guidance from your company’s Money Laundering Reporting Officer (MLRO) or Nominated Officer.
• Take note of blocks or holds on a customer’s account. Take note of the reason for the hold. If it is clear that there is an investigation being carried out, do not disclose this to the customer. If the reason for the hold is not clear, seek advice from your MLRO or Nominated Officer on the information to be shared with the customer.
• Financial crime teams should create and proactively share policies and controls on handling customer information. A clear policy and step-by-step guidance that sets out the actions required of employees in the event that a customer is being investigated should be circulated frequently.
• Build a culture of responsibility. Provide regular compliance training to new and existing team members to ensure your team understands how to manage customer data and what information can be shared in different scenarios. This prevents ambiguity and provides the right  guidance when faced with situations where tipping off may occur.
• Design your systems and controls to help prevent tipping off. If you have the ability to segregate information and limit it to those with a higher level of training you will immediately reduce your risk and additionally improve your data management.

Balancing customer service and financial crime prevention

Regulated fintechs and banks always want to provide their customers with a positive experience, but they must balance customer experience with financial crime prevention and do everything they can to protect vulnerable individuals.

Tipping off can be a complex and misunderstood concept, especially for new fintechs who might not have robust compliance teams and fin crime prevention processes in place.

By educating staff, putting the right process in place and creating a culture that fosters responsibility, fintechs can avoid the common pitfalls and mistakes that lead to tipping off.

For more information on tipping off:

1. Proceeds of Crime Act 2002
2. Amendments to the Terrorism Act 2000 and Proceeds of Crime Act 2002