The Court of Appeal has ruled that, although the Court does have jurisdiction to grant interlocutory relief which disapplies the application of the Suspicious Activity Reports (SAR) regime under the Proceeds of Crime 2002 (POCA), the circumstances under which the regime may be disapplied are likely to be exceptional.
Pursuant to POCA, a financial institution is obliged to seek the consent of the National Crime Agency (NCA) before it can proceed in any case in which it is known or suspected that a money laundering offence might be committed. Failure to do so exposes the institution to the risk of prosecution for money laundering offences.
In this case, the bank had submitted a SAR consent request to the NCA to return funds to N, on the basis that the bank suspected the credit balance on some of N’s accounts constituted criminal property as defined under POCA. The NCA granted consent, but because the bank had not sought specific consent to carry out other transactions on the account, N applied to the court for an injunction requiring the bank to carry out additional transactions, and for a declaration from the court that in carrying out these transactions, the bank would not be committing any money laundering offence under POCA. The application was granted at first instance, and the judge made a declaration that in complying with the injunction the bank would not be committing any offence. In making his decision, the judge noted that the fact that the consent request had been granted suggested that the NCA had no evidence that the funds were criminal property.
The NCA appealed the decision on the grounds that:
- The court did not have the jurisdiction to make the orders or, alternatively, the court should have refused to exercise its discretion to do so; and
- The judge had erred in concluding that an interim declaration disapplying the POCA money laundering regime was appropriate.
The Court of Appeal found in favour of the NCA on the basis of Ground 2. It held the court does have the jurisdiction to intervene to disapply the provisions of POCA and grant interlocutory relief in the context of a SAR consent request, but that the cases in which it would be appropriate to do so would be few and far between.
In passing judgment, the Court of Appeal made it clear that Parliament had entrusted the NCA with the task of assessing whether or not consent should be granted to proceed with a financial transaction where there was a suspicion that the funds constituted criminal property, and that the timetable provided for in the legislation could be described as “workable” and a “reasonable” balance of conflicting interests. It further held that the judge at first instance had been wrong to find that the fact the NCA had granted consent meant it had no evidence that the funds were criminal property, particularly given that the NCA has publicly averred that a decision to grant consent is not a declaration as to the legitimacy or otherwise of the property concerned.
It would have been interesting to know the Court’s views on whether the extended timetable to be brought into force with the enactment of the Criminal Finances Act will still constitute a timetable which could be described as “workable” and a “reasonable” balance of conflicting interests as the Act will extend the maximum time-limit by which the NCA has to respond to a SAR request from 31 days to 186 days.