A recent case highlights the dilemma of businesses whose assets are frozen as suspected proceeds of crime.
Draco, the earliest known law-giver of ancient Athens, is well known for imposing the death penalty for even minor offences and 'draconian' has accordingly become a byword for harsh rules. A recent case provides a reminder that the Proceeds of Crime Act 2002 (POCA) follows in Draco's footsteps.
N, an FX and payment services provider, banked with RBS. In October 2015, RBS suspected some of N's accounts of containing the proceeds of crime, and duly made a suspicious activity report to the National Crime Agency (the NCA). RBS decided to terminate its banking relationship with N and obtained consent under POCA from the NCA to return funds to N (but not to third parties). Faced with such a drastic threat to its business, indeed a potential death-knell, N managed to find alternative banking facilities, but sought orders from the court requiring RBS to make certain payments from N's accounts to third parties. The NCA opposed the orders. However, the court noted that the NCA was willing for the money to be returned to N, which the court thought indicated that the funds were unlikely to be the proceeds of crime in fact.
The NCA appealed, essentially seeking a declaration that the orders were wrong in law but not trying to set aside the orders. The Court of Appeal agreed that the orders should not have been issued.
While the Court of Appeal was not willing to go quite as far as holding that the court had no jurisdiction to grant orders of this nature (as the NCA had argued), it accepted that the statutory regime should prevail, except in exceptional circumstances, which had not been present here.
That statutory regime allows the NCA 7 working days and up to 31 days (ie a total of up to 40 days) to decide whether to permit any transactions involving assets that are suspected of being the proceeds of crime. That can be an eternity in business, and could well pull the plug on a thriving organisation – even though the assets may not be the proceeds of crime at all. However, the Court echoed past judgments in holding the statutory regime as representing a "workable" and "reasonable" balance of conflicting interests – cold comfort to an innocent business struggling to survive.