The Court of Appeal in the latest instalment of this long running dispute found that the identity of employees making money laundering reports can be redacted when disclosing documents in litigation.
Mr Shah and his wife, two Zimbabwean-based customers brought a claim against HSBC Private Bank (UK) Limited ("HSBC"), for losses allegedly caused as a result of delays whilst HSBC's requests for consent under the Proceeds of Crime Act 2002 ("POCA") were pending with the Serious Organised Crime Agency ("SOCA").
An earlier Court of Appeal judgment, in connection with HSBC's partially successful attempt to strike out the claim, resulted in the dismissal of a number of allegations. The Court of Appeal ruled, however, that HSBC could be required to adduce evidence of its money laundering suspicions and prove these were genuine. The case has been proceeding since that time.
In Shah and another v HSBC Private Bank (UK) Limited  EWCA Civ 1154, the Court considered an interim application regarding the disclosure of documents evidencing HSBC's suspicions of money laundering. The issue was whether HSBC could redact (blank out) the identity of individual employees. HSBC disclosed a set of documents relating to its suspicions, but redacted the names of all the individuals reporting or considering the suspicion, save for its nominated MLRO. At first instance, Coulson J had ruled that the names of the individuals were relevant and disclosable, but permitted limited anonymisation on the grounds of public interest immunity.
The Court of Appeal upheld HSBC's appeal. The identity of the individuals was not disclosable under the Civil Procedure Rules, because it was not information which supported the Shahs case or adversely affected HSBC's case. The redactions were therefore permitted, irrespective of the public interest immunity position.
This ruling will be welcomed by all those involved in money laundering reporting processes at banks and other regulated firms. It provides some additional comfort that staff can report their suspicions without undue concern that they may be identified in subsequent proceedings. The Court's ruling does, however, depend in part on the way in which the Shahs' case was articulated, following their narrow victory in the earlier strike out application. The basis on which the genuineness of HSBC's suspicions was challenged was a very narrow one. In turn, the documents which could be said to support that challenge were limited. It is not impossible to envisage circumstances in which the identity of reporting employees would be relevant and disclosable, in which case public interest immunity issues would be relevant. A full briefing on this ruling is available here.