Bank Cleared of Liability for Losses Due to Reasonable Suspicion
15th August, 2012
Money laundering legislation requires banks to freeze transactions pending clearance if they suspect that the funds concerned in the transaction may be the proceeds of crime or connected with criminal activity. The procedure involves the filing of a Suspicious Activity Report (SAR) with the Serious Organised Crime Agency (SOCA) and seeking clearance to proceed with the transactions.
When banking giant HSBC delayed completion of three legitimate transfers by a Zimbabwean businessman, pending clearances from SOCA, the result was a sequence of events which included his affairs coming under the scrutiny of the Metropolitan Police and the anti-money laundering authorities in Zimbabwe. This led to him being served with a search warrant by the Zimbabwean police, who conducted searches at his office and home. The businessman had also been reported to the Zimbabwean authorities by a former employee who alleged that he was engaged in money laundering.
As a result of the actions of the Zimbabwean authorities, the businessman brought a claim against HSBC for losses of more than $300 million.
Although the court rejected the claim on more than one ground, of most interest to businesspeople contemplating large and perhaps unusual transactions was the ruling that the bank had acted properly in delaying the payment so that clearances could be obtained from SOCA.
If you are considering a transaction which might cause your bank enough concern to lead to a referral to SOCA, it is usually sensible to advise the bank in advance and to make sure that any enquiries or clearances are obtained in good time. This is especially true if a delay must be avoided.
For advice on this area, please contact Nick Clarke at [email protected] or on 01244 405558.
You might also be interested in...
18th July, 2018
Special Focus: Solicitors’ Professional Indemnity Insurance Run-off – it dominates the thoughts of sole practitioners and partners in smaller law firms in my experience and restricts the ambitions of firms. The SRA could help law firms by relaxing their rules on run-off cover on their Solicitors’ Professional Indemnity Insurance to help firms merge or close more easily. This would protect... Read More »
17th July, 2018
Helen Watson, Head of Employment Law at Aaron & Partners LLP, has taken up an invitation to become a Trustee of both the Trust Board and the Main Board Theatr Clwyd has bolstered its senior leadership team with the appointment of an experienced employment law solicitor to support its vision of being at the forefront of theatre making... Read More »
6th July, 2018
When a business invests in its community it deserves praise – but it must go beyond that, writes Helen Watson, a trustee at Claire House and partner at Aaron and Partners Solicitors. Corporate social responsibility (CSR) is the link between a company and the community in which it operates. As a trustee on charity boards including Claire House... Read More »