Why is a banker like a police informant?
The high court has recognised the importance of protecting the identity of employees reporting suspicions under the Proceeds of Crime Act, comparing them to police informants¹.
All those in the regulated sector, such as banks, financial institutions, and legal and accountancy firms, face an obligation to report suspicions of money laundering and make the appropriate disclosures. The banking sector provides over 78% of all suspicious activity reports. In a recent judgment, the High Court considered the issue of whether banks (or other entities) making reports to SOCA are entitled to withhold the identity of the employees on whose suspicions the reports were based.
The general principle of this decision, to protect the identity of individual employees making SARs from disclosure in subsequent civil litigation concerning those reports, will be welcomed by financial instructions and other regulated businesses. It is of course immensely important to ensure the proper reporting of suspicions and the correct application of firms' money laundering policies and procedures. The decision is by no means a blanket protection though. In criminal proceedings the position may be different, and the judge did order some level of identification. The issue addressed in the previous judgment in this case² should also be re-iterated. If a suspicious activity report proves wrong or unnecessary, a firm may be put to proof at trial that its suspicions were genuine and held in good faith. Ensuring that is the best protection of all.
Lawyers Tim Strong, Richard Doble
¹Shah & Anor v HSBC Private Bank (UK) Ltd [2011] EWHC 1713 (QB)
²Shah & Anor v HSBC Private Bank (UK) Ltd [2010] EWHC Civ 31
