The court conisdered the effects of the provisions of the 2002 Act to be to ‘force a party in NatWest’s position to report its suspicions to the relevant authorities and not to move suspect funds or property either for seven working days or, if a notice of refusal is sent by the relevant authority, for a maximum of seven working plus 31 calendar days. Furthermore, the anti-tip off provisions of section 333 of the 2002 Act prohibit the party from making any disclosure which is likely to prejudice any investigation which might be conducted following an authorised disclosure under section 338.
The way these provisions work can be illustrated by the facts of this case. Once NatWest suspected that Squirrell’s account contained the proceeds of crime it was obliged to report that to the relevant authority, in this case the commissioners. It was also obliged not to carry out any transaction in relation to that account. That remains the position unless and until consent to the transactions is given by the commissioners or, if it is not, the relevant time limits under section 335 have expired. In the meantime, it is not allowed to make any disclosure to Squirrell which could affect any inquiries the commissioners might make. Obviously, telling Squirrell why it had blocked its account would constitute a prohibited disclosure.
These provisions could work hardship, as indicated above. But I accept Mr Grodzinski’s submission that it must be assumed that the legislature intended section 328(1) to be of wide scope and for the seven- and 31-day time limits to be sufficient protection of parties in the position of Squirrell.’
The legislation may have very serious consequences for the customer. Laddie J said: ‘I should say that I have some sympathy for parties in Squirrell’s position. It is not proved or indeed alleged that it or any of its associates has committed any offence. It, like me, has been shown no evidence raising even a prima facie case that it or any of its associates has done anything wrong. For all I know it may be entirely innocent of any wrongdoing. Yet, if the 2002 Act has the effect contended for by NatWest and the commissioners, the former was obliged to close down the account, with possible severe economic damage to Squirrell. Furthermore, it cannot be suggested that either NatWest or the commissioners are required to give a cross-undertaking in damages. In the result, if Squirrell is entirely innocent it may suffer severe damage for which it will not be compensated. Further, the blocking of its account is said to have deprived it of the resources with which to pay lawyers to fight on its behalf. Whether or not that is so in this case, it could well be so in other, similar cases. Whatever one might feel, were Squirrell guilty of wrongdoing, if, as it says, it is innocent of any wrongdoing, this can be viewed as a grave injustice. I do not understand Mr Grodzinski to dispute this analysis. He says that the 2002 Act must be regarded as the legislature’s determination of what provisions are necessary to curtail criminals’ ability to profit from crimes. Furthermore, the legislation contains some, albeit restricted, provisions intended to limit harm that these provisions can inflict on innocent parties. It is not for the courts to substitute their judgment for that of the legislature as to where the balance should be drawn. If, as he says is the case here, the legislation is clear, the courts cannot require a party to contravene it.’
Judges:
Laddie J
Citations:
[2005] EWHC 664 (Ch), [2005] 1 All ER (Comm) 749
Links:
Statutes:
Proceeds of Crime Act 2002 328(1) 335
Jurisdiction:
England and Wales
Cited by:
Cited – UMBS Online, Regina (on the Application Of) v Serious Organised Crime Agency CA 21-Mar-2007
Application for leave to appeal against refusal of leave to bring judicial review of a decision of the respondent agency. Leave to appeal was granted, but the matter was returned to the administrative court for review. . .
Lists of cited by and citing cases may be incomplete.
Banking
Updated: 04 July 2022; Ref: scu.230948