'Actions that the MLRO of BCD should take\r'

'Introduction\r\nA M stary La lowing insurance coverage Officer (MLRO) is an officer within a unswerving or practice that has been nominated to authorise apocalypses to the issue Crime Agency (NCA), formerly the Serious unionised Crime Agency (SOCA), under the Proceeds of Crimes bring (POCA) 2007 and the Terrorism Act (TA) 2000. It is provided under Regulation 20 of the Money Laundering Regulations 2007 that if an MLRO receives an internal divine revelation of surmise bullion laundering or terrorist financing, they argon essential to consider the apocalypse and decide whether the grounds of disbelief ar sufficient enough to pass the disclosure onto NCA (Ellinger et al; 2011: 98). Since the MLRO of BCD argot has received an internal capital laundering hunch pass over from Christian, they go away be requisite to consider whether the matter should be passed onto NCA. accustomed that Radovan Rankovich (RR) is allegedly valued by the authorities in the Ukraine for criminal meets against the state, and has received a recent exaltation of ?15 one million million from a Corporate gain Provider in Cyprus, it is potential that this would warrant a disclosure to NCA for investigation. In accordance with this, the MLRO leave behind be required to file a Suspicious use repport (SAR) with NCA and subsequently liaise with them to deal with this matter accordingly (Ellinger et al; 2011: 97). Part 7 of POCA practises it a requirement for depones to control a disclosure to NCA if they jolly suspect that a person is involved in cash laundering (s. 329). If the MLRO fails to make such a disclosure then he or she whitethorn be institute criminally liable under this Act for a failure to disclose (s. 331).\r\nThis is because a person take outs an offence under s. 329 if they; acquire, use or have possession of, criminal property. Since a lingo would fall within the scope of this section, it is possible that BCD strand would be subject to crimina l proceedings if they failed to sustain the appropriate action and thus make the applicable disclosures. If the MLRO does non believe that the grounds of suspicion are sufficient to report the matter to NCA, then the MLRO get out be required to make further inquiries ( transnational fiscal Fund, 2011: 65). Once the MLRO has make a report to NCA, the report go forth be ‘protected’ under s. 337 so that nonhing in the report shall be interpreted to desecrate either restriction on the disclosure of data. Given that BCD money box may have assiduous in money laundering by allowing RR’s transactions to take place, they may have a defence under s. 338 if they make demonstrate that they do the disclosure as soon as possible. convertible provisions overly apply under the TA if the person is also suspected of terrorist financing. As Christian has received a text pass on stating that RR is wanted by the authorities in the Ukraine for criminal actions again st the state, it is likely that the MLRO bequeath also be required to survey with the provisions under the TA for a valid suspicion of terrorist financing. An obligation to report under the TA go away in that respectfore arise which means that the MLRO forget be required to disclose the identity of RR, any information that relates to the matter and the whereabouts of the laundered property.\r\nThere are two different boldnessfuls of report that may be make by the MLRO, namely protected reports and authorised reports. A protected disclosure is do by a person during the course of their trade, profession or employment. This type of disclosure is by and large made by a person who is carrying our professional activities. An authorised disclosure is made by a person who is about to commit a prohibited act or has already move a prohibited act (Bastable and Yeo, 2011: 108). Since the border has already dealt with the property that is suspected of world laundered, it is more a ppropriate for an authorised disclosure to be made. The MLRO will also be required to obtain have from NCA under ss. 335 and 336 to determine whether Christian elicit action any further transfers out of RR’s answer for. This will be done by making a ‘ react report’ to NCA, which will then pulley block any transactions for s stock-still working days. If NCA salutes consent to the MLRO, the MLRO will then be able to give consent to Christian to carry out the transactions (Bastable and Yeo, 2011: 108). If NCA refuse consent, however, the proposed transactions will be icy(p) for a further 31 days, unless consent is given during that period; R (on the application of UMBS Online Ltd [2007] WL 1292620. \r\nThe Risks and nationals for the buzzword\r\nThis fact issue regarding RR is likely to be problematic for the BCD Bank as they will want to act in the best interests of their node, namely RR, so that they remain in business with them whilst at the same tim e they are required to fulfil certain obligations imposed upon them by law. Because BCD will be required to disclose their suspicions even if RR has not acted in a criminal manner, this will have a damaging effect upon RR’s reputation and as put by Hislop (2009); â€Å" inattentive commodity-for-naught faith, little more than a â€Å"bad feeling” base trigger a avers disclosure obligations under POCA 2002, with in some cases catastrophic commercialized consequences for the guest and a damning of his hitherto â€Å"good name” in the business community.” If the edges suspicions are incorrect, this can be significantly detrimental for RR. As such, the trust will need to be careful that they are striking a balance amid the interests of RR with its duties to disclose. In the recent case of SHAH and other v HSBC undercover desireing concern (UK) Ltd (2009) EWHC 79 (QB) the implications Part 7 has upon the rights of the soul and the hopeing busine ss was clearly highlighted.\r\nHere, it was demonstrated that where a bank makes a SAR in respect of a funny transaction, they may not be provided with protection if the customer decides to quarrel the banks suspicions in the future. This is so, despite the fact that a criminal offence may have been committed if the bank failed to make such a disclosure. Customers will have a right to challenge the banks suspicions with the bank then universe required to prove that the suspicion was reasonable. It may be fractious to determine how the bank can justify making a disclosure since it was made clear by the address in this case that â€Å"the defendant must think that on that point is a possibility, which is more than fanciful, that the relevant facts exist. A timid feeling of unease would not suffice.” The bank will therefrom be taking a encounter in many any disclosure, especially this one since it will have to be shown that the text message was sufficient enough for a d isclosure to be made. Furthermore, even if the circumstances do render a disclosure justified, the bank’s conclusiveness may still be challenged which can be pricey and time consuming. In K Ltd v issue Westminster Bank plc [2007] 1 WLR 311 it was noted by the judicatory that; â€Å"to intervene between a banker and his customer in the performance of the contract of mandate is a respectable intercession with the free flow of trade. But fantan has considered that a limited interference is to be tolerated in preference to allowing the undoubted evil of money-laundering to run rife in the commercial community.”\r\nTherefore, even though such a disclosure may interfere with the relationship between the bank and RR, such interference will be required if it will be likely to forestall money laundering from taking place. The bank ineluctably to be clear that an interference of RR’s account is appropriate on the circumstances, since a frozen bank account for a p eriod of time has in the past been considered a ‘grave injustice’ in the case of Squirrell Limited v National Westminster Bank plc (Customs and Excise Commissioners intervening [2006] 1 WLR 637. Here, the customer’s funds were frozen leading in the customer being unable to afford the legal fees it would cost to challenge the decision. Therefore, if RR’s funds were frozen, which subsequently prevented RR from challenging the decision; it is unlikely that this would be deemed appropriate by the court. In accordance with this, it has been said that the test for suspicion is â€Å"a purely subjective matter” (Medroft, 2010: 190). The decision as to whether the suspicion is reasonable will therefore enumerate upon whether Christian real believed that the transaction was suspicious. If it cannot be found that this is the case, the interference cannot be considered justifiable and a reveal of the customer’s human rights may also be established a s in K Ltd.\r\nThe bank will therefore be required to consider whether ‘reasonable grounds’ do actually exist, having regard to the elements constituting market vitiate offences (Hudson and Hutchinson, 2009: 1). There are many inherent risks that are associated with disclosures and as such, it is live that the bank is aware of its exact rights and obligations. In SHAH the court found that the bank did not act in an unreasonable manner which is likely to be the case in the instant situation. As such, it will most likely be difficult for RR to show that the bank had not acted in good faith. However, it could be argued that there was an unreasonable delay by the bank to make the disclosure under s. 338(2). As a result of this, the bank could be exposed to liability for breach of its duty of care (Medroft, 2010: 190). Whether this is acceptable remains an arguable subject but as expressed by Benjamin (2007: 62); â€Å"here the objective is not assured consent to risk b ut combating crime.” Accordingly, it is therefore generally accepted that a bank’s interference will be justified on reality policy grounds. The bank will still be subjected to many risks when making a disclosure, nonetheless, and must therefore consider whether the consequences of making a disclosure can be justified (Ellinger et al. 2010: 114).\r\nIn addition, if the bank decides to make a disclosure, they must be careful not to allow the customer to find out as they can be found liable for ‘tipping off. This is another issue that may arise since a customer could become aware that a disclosure has been made simply due to the fact that their account has been suspended. It could be said that the bank is in a difficult situation as whatever option it takes, sanctions may still be imposed. As one justice noted in Governer & come with of the Bank of Scotland v A Ltd [2000] Lloyd’s Rep Bank 271, 287; â€Å"the bank may commit a criminal offence if it pa ys or if it refuses to pay.” Furthermore, if the bank makes a disclosure base on its suspicions, which later turn out to be unfounded, the bank risks civil liability for breaching its contract with its customer (Ellinger et al: 2010: 114). This is because the bank will have frozen the customer’s account which would have prevented payments from being made in and out of the account. Because the banks have a significant burden imposed upon them when it comes to dealing with money laundering, some attempt has been made to gibe that banks performing in good faith will not face criminal liability. For example, it was held by the court in C v S [1999] 2 all(a) ER 343 that â€Å"it would not normally be an abuse of process to prosecute a bank which was doing no more than obeying a court order for disclosure.” Still, it is necessary for the bank to consider all of the risks before considering whether to make a disclosure or not.\r\nOverall, it is necessary on the facts for the MLRO of BCD Bank to make a disclosure to NCA since it does get on that the suspicions are reasonable. This is based upon the transaction of ?15 million that was made recently as well as the text message that Christian has received. Whilst the bank would be required to examine the potential issues with disclosing such information and freezing the account of RR this appears necessary and in the commonplace interest. It will most likely prevent money laundering activities from taking place and will ensure that Christian, the MLRO and the bank are complying with their obligations.\r\nReferences \r\nBastable, G., and Yeo, N., (2011). Money Laundering fairness and Regulation: A Practical Guide, Oxford University Press.\r\nBenjamin, J., (2007). Financial rectitude. OUP Oxford.\r\nEllinger, E. P., Lomnicka, E., and Hare, C., (2011) Ellinger’s Modern Banking Law, (Oxford University Press.\r\nEllinger, E. P., Lomnicka, E., and Hare, C., (2010) Ellinger’s Modern Banki ng Law. 5th Edition. OUP Oxford.\r\nHislop, D., (2009). ‘Banks, severe acute respiratory syndrome & the Customer’ 159 New Law Journal 1099, Issue 7380.\r\nInternational Monetary Fund., (2011) Banking and Insurance, Business & Economics.\r\nMedcroft, N., (2010). A Banker’s Liability for Damages Arising from Compliance with PT 7 POCA’ 4 Journal of International Banking and Financial Law 227, Issue 4.\r\nMedcroft, N., (2009). Refusing to Execute Payment Instructions Where a Bank Suspects Money Laundering. 4 Journal of International Banking and Financial Law 190, Issue 4.\r\nHudson, D., and Hutchinson, K., (2009). Suspicious legal proceeding Reports: Reporting Obligations of Financial Institutions in the UK. Complinet, [Accessed 07 June, 2014].\r\nCases\r\nC v S [1999] 2 All ER 343\r\nGoverner & Company of the Bank of Scotland v A Ltd [2000] Lloyd’s Rep Bank 271, 287\r\nK Ltd v National Westminster Bank plc [2007] 1 WLR 311\r\nR (on the application of UMBS Online Ltd [2007] WL 1292620 \r\nSHAH and another v HSBC private bank (UK) Ltd (2009) EWHC 79 (QB)\r\nSquirrell Limited v National Westminster Bank plc (Customs and Excise Commissioners intervening [2006] 1 WLR 637\r\n'