In December 2009, Hamblen J gave a summary judgment in the case of Shah and Another v HSBC Private Bank (UK) Limited against Mr Shah (and his wife). They were claiming damages against the bank for breaches of duty and for failing to follow instructions to process transactions whilst requests for consent under the Proceeds of Crime Act 2002 (POCA) were pending with the Serious Organised Crime Agency (SOCA). On 4 February 2010 the Court of Appeal allowed in part Mr Shah's appeal against the summary judgment.
The Court of Appeal's decision means that customers can now obtain disclosure of banks' internal documents relating to money laundering disclosures and put them to proof at trial of the suspicions they report to SOCA, with the consequence that if they fail to justify any disclosure made that the bank could be ordered to pay damages in respect of any losses suffered. The case also leaves open the possibility that banks may owe duties to their customers to inform them about money laundering disclosures which have been made about them.
The case affects banks but may also affect others who make money laundering disclosures. Banks, financial firms and others in the regulated sector, such as lawyers and accountants, may be caught and even those outside the regulated sector for the purposes of POCA will need to ensure that proper processes are in place where they make Suspicious Activity Reports.