Court of Appeal

Published May 15, 2007

Regina (UMBS Online Ltd) v Serious Organised Crime Agency and Another

Before Lord Justice Ward, Lord Justice Sedley and Lord Justice Hooper

Reasons May 2, 2007

The Serious Organised Crime Agency, a powerful statutory body whose decisions could imperil private and business banking activity on no more than a reported suspicion of money-laundering, should not withhold giving consent to a bank to allow it to operate a customer’s account under section 335 of the Proceeds of Crime Act 2002 without good reason.

It had an obligation to keep matters under review and its refusal of a bank customer’s request to revisit the matter was unlawful.

The Court of Appeal so held, inter alia, in a reserved judgment giving reasons for its decision on March 15, 2007 to allow an appeal by the applicant, UBMS Online Ltd, from the refusal by Mr Justice Lloyd Jones ([2007] EWHC 1098 (Admin)) to grant permission to apply for judicial review of the agency’s refusal to grant consent to the applicant’s bank, Laiki Bank, to carry out its customer’s mandate regarding funds held on trust for the applicant. The Commissioners of Revenue and Customs were joined as an interested party.

Mr Paul Downes, Mr Peter de Verneuil Smith and Ms Helen Wolstenholme for UBMS Online; Mr Jonathan Hall for the agency and the commissioners.

LORD JUSTICE WARD said that Part 7 of the Proceeds of Crime Act 2002 dealt with money-laundering, sections 327, 328 and 329 making it an offence to engage in activities involving benefiting from criminal property.

A bank committed an offence by allowing its business to be conducted in respect of funds suspected to be criminal property unless it had made an authorised disclosure under section 328 and received the appropriate consent under section 335 of the Act.

By letter dated February 27, 2007, the agency refused the applicant’s request to grant consent to the bank to carry out its banking mandate to deal with its funds under section 335.

To strike a proper balance between undue interference with personal liberties and the need constantly to fight crime, the least that could be demanded was that the agency did not withhold consent without good reason.

But, somewhat unsatisfactorily, as pointed out in K Ltd v National Westminster Bank plc ( The Times July 27, 2006; [2007] 1 BLR 26), the court could not require a banker who made a disclosure within section 338 to give further disclosure if to do so would prejudice an investigation.

The agency accepted, however, that it had to keep matters under review and give the bank consent when there was no longer any reason for withholding it.

Further, a request from a person directly affected by the freezing of an account triggered the agency’s duty to look at the matter again.

The agency’s suggestion that it should only do so on a request from the bank was absurd. The customer was entitled to ask for a review of the matter and the agency was obliged to do so. By refusing to revisit the matter, the agency had erred in law and it followed that its decision of February 27 had to be quashed.

Lord Justice Sedley gave a concurring judgment and Lord Justice Hooper agreed.

Solicitors: Malletts; Legal Team, SOCA and Solicitor, Revenue and Customs.

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