Money Laundering: Further Clarity Provided By The Court Of Appeal On The Operation Of The Consent Regime

Author:Mr Daren Allen
Profession:Dentons
 
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On 7 April 2017, the Court of Appeal in the decision of The National Crime Agency v. N and Royal Bank of Scotland Plc provided further clarity for banks in relation to the money laundering suspicious activity regime contained in the Proceeds of Crime Act 2002 (POCA) and the ability of customers to challenge banks when bank accounts are temporarily frozen.

Background

The facts of the case can be summarised as follows:

The Bank suspected that the credit balance in certain accounts of its customer ('N') constituted criminal property.  Accordingly, it froze the accounts and made a suspicious activity report to the National Crime Agency (NCA) seeking consent to return the funds to N. N issued proceedings for an interim mandatory injunction requiring the Bank to operate N's accounts and for declaratory relief. On hearing the application, Mr Justice Burton gave a series of orders requiring the Bank to make a number of specified payments. In order to protect the Bank the court gave an interim declaration that, in making payments, the Bank would not be required to make "an authorised disclosure" seeking consent from the NCA under POCA and would not commit a criminal offence by failing to make a disclosure or by complying with the injunction. In reaching this view the court relied upon the case of Bank of Scotland v. 'A' Limited which was a decision on the money laundering provisions contained in the Criminal Justice Act 1988 (which pre-dated POCA) and where the court had given a similar interim declaration. The appeal

The NCA appealed the orders as being wrong in law on the following grounds:

The judge lacked the relevant jurisdiction to make the orders: POCA establishes a statutory regime1 which the NCA and the parties must abide by and the court cannot intervene. In the alternative, to the extent the court had any discretion, the statutory scheme was a highly relevant factor to the exercise of that discretion. The Judge erred in law in concluding that this was an appropriate case for an interim declaration in that: (i) he wrongly placed reliance on Bank of Scotland v. 'A' Limited which was no longer applicable; (ii) he erred in his finding that the mere fact of a consent from the NCA that the Bank could return funds to its customer meant that there was no evidence known to the NCA that the monies could constitute or be suspected of being criminal property; and (iii) this was not a sufficiently exceptional case to justify the grant of an interim declaration....

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