OFAC has reached a settlement of $4m with British Arab Commercial Bank (BACB), a commercial bank based in London, UK, with “no offices, business or presence under the US jurisdiction”.

BACB processed 72 bulk funding payments totalling approximately $190m on behalf of 7 Sudanese financial institutions, including the Central Bank of Sudan, between September 2010 and August 2014.

In apparent violations of the Sudanese Sanctions Regulations, BCAB maintained a USD nostro account (an account held by a UK bank in foreign currency in a foreign bank), which was held outside the US, but the funding for that account was routed through US. That nostro account was then used to facilitate transactions (processed outside of . . .

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They cover the latest developments with:

1. the impounded Iranian oil tanker the Adrian Darya-1,
2. HMRC’s largest-ever money laundering fine and
3. the trailer of the Laundromat film.

In the deep dive, Matthew Redhead tells us about his forthcoming paper on the effectiveness of the AML regime and what can be done to make it more effective.

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Speed read

1. Standard Bank Jersey Limited was found guilty in the Jersey Royal Court after it admitted allowing a woman to use her deceased partner’s bank account to pay her rent and shopping bills.
2. Standard Bank Jersey Limited was sentenced for allowing the woman to access the account – which it accepted should have been immediately suspended – without obtaining paperwork required by the Probate Law.
3. Imposing the £20,000 fine – £15,000 less than the amount sought by the Crown – Lieutenant Bailiff Jurat Anthony Olsen said that the Court accepted that the bank’s staff had overlooked its own policy with the best of intentions in a bid to avoid hardship to their client’s partner.

Key issue for Jersey financial services

1. This is a case demonstrating one of the differences in Probate law between Jersey and the UK.
2. “Intermeddling” is a criminal offence in Jersey, that is,
   1. administering the assets of a deceased person without first obtaining a Grant of Representation.
3. On the other hand, in the UK it is legitimate and common practice to apply the deceased’s funds prior to obtaining the Grant of Representation for liabilities such as funeral expenses and inheritance tax.
   1. “Intermeddling” in the UK is an act showing an intention to assume the executorship which may invalidate a subsequent renunciation.

Key details

1. Crown Advocate David Hopwood, prosecuting, explained
   1. that the deceased, who died aged 80 in Kenya last year, was in a long-term relationship with a woman to whom he left the bulk of his estate.
   2. This included an account containing £49,953.41 at the time of his death.
2. Advocate Hopwood told the Court that the bank had a formal written policy to deal with what should happen when a client died which included
   1. blocking accounts until the formal grant of probate had been secured.
3. In this case, however, none of their own requirements had been complied with.
   1. Instead, a member of staff had agreed to keep the account open between the beginning of August and 7 November 2018 when the error was discovered and the account finally locked down.
   2. During that period, some £9,552.49 had been used to pay for rent, medical and restaurant bills, and shopping.
   3. When the error was discovered on 7 November, the bank spoke to the deceased’s partner who agreed to reimburse the account.
4. Later that month Standard Bank notified the Jersey Financial Services Commission and the Attorney General of their mistake. it said in a letter to the Attorney General.
   1. “The breach [of the Probate Law] resulted from an incorrect decision that the Bank’s normal procedure could be overridden in the circumstances,”

The fine

1. Moving for a fine of £35,000, Advocate Hopwood told the Court
   1. that although the amount of money involved was relatively small, Standard Bank’s offence had been exacerbated by the fact that they had taken a conscious decision not to lock down the account and had kept no record of the discussions leading to their decision.
2. Advocate Matthew Cook, representing the bank,
   1. offered an “unreserved apology” and told the Court that their staff, acting to try to help their client’s partner who was also his joint executor and principal beneficiary, had not appreciated the consequences of their actions.
   2. “There was no conscious decision to breach the Probate Law or to commit an offence. Had they realised the implications, they would not have taken the actions they took,” he said.
3. Advocate Cook explained
   1. that the bank had thoroughly reviewed its procedures in the light of the incident and had added further robust procedures to ensure that additional checks and balances were introduced in future.
4. Delivering the Court’s sentence, Lieutenant Bailiff Anthony Olsen noted
   1. that there was no intention on the bank’s part either to dissipate their client’s estate or to evade stamp duty, which was subsequently paid in full
5. In reducing the fine sought by the Crown, he said the Court took into account a number of mitigating factors including the voluntary admissions and guilty plea, the fact that there had been no loss to the estate, the revised policies implemented by the bank and its previous unblemished record.
   1. “The bank has behaved impeccably since the matter was discovered’, the Lieutenant Bailiff commented, as he imposed a fine of £20,000.

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A DIRECTOR of the financial regulator’s enforcement division is seeking a judicial review of decisions made by the Guernsey Police Complaint’s Commission and the Committee for Home Affairs.

1. Simon Gaudion wants to know
   1. the circumstances that led to a police investigation being conducted against him and his employer, the Guernsey Financial Services Commission, and
   2. the reasons why complaints he made against two senior police officers, including a former chief officer, were dismissed without explanation
2. In August 2015,
   1. the GFSC imposed sanctions on a regulated company, Confiance, after significant failings were found in its anti-money laundering and counter terrorist financing systems.
   2. Confiance former executive director and controller Leslie Hilton was fined £50,000.
   3. Directors at Confiance, including Mr Hilton, launched a failed bid to challenge the GFSC’s decision to release a public statement on the sanctions.
   4. This led to them making allegations of fraud against Mr Gaudion and the GFSC to Guernsey Police.
3. On or around January 2016
   1. Guernsey Police initiated the criminal investigation against both parties and Jersey Police, as an independent authority, was asked to do it.
4. In August 2017,
   1. Jersey Police notified the GFSC that they wished to speak to Mr Gaudion.
   2. The GFSC told Mr Gaudion of the investigation in October 2017 – some 22 months after it had commenced.
5. In March 2018,
   1. Mr Gaudion filed a written complaint to the GPCC in relation to the criminal investigation.
6. Mr Gaudion alleged the the investigation
   1. had been commenced and pursued in bad faith;
   2. was not concluded in a reasonable time, and
   3. that confidential information relating to it had been leaked into the public domain by Guernsey Police.
7. The complaint was directed against two senior officers –
   1. then head of law enforcement Patrick Rice and
   2. the then acting detective superintendent Philip Breban, who was promoted to superintendent in 2018.
8. A complaint was also made against
   1. Guernsey Border Agency official Paul Ferbrache, though it does not form part of Mr Gaudion’s claim for judicial review
   2. the Committee for Home Affairs to deal
9. As Mr Rice and Mr Breban each held the rank of superintendent or above, it fell to the Committee for Home Affairs to deal with the complaint in its capacity as the ‘appropriate authority’ under the law.
10. In August 2018, Home Affairs sought the assistance of Sussex Police to do it and Sussex deputy head of professional standards, Detective Chief Inspector Jon Hull, notified Mr Gaudion of his appointment to investigate the matter.
11. In November last year (2018)
    1. Mr Gaudion contacted DCI Hull and asked for an update on the investigation and a copy of his report.
    2. DCI Hull said it was not normal to send such a report until the appropriate authority’s decision was known.
    3. It could only be done when it was known and with the appropriate authority’s consent.
12. On 7 February this year 2019
    1. Home Affairs president Deputy Mary Lowe wrote to Mr Gaudion saying that DCI Hull had concluded that there was no evidence to support a case to answer against either Messrs Rice or Breban.
    2. The committee therefore proposed to take no action against either.
    3. It noted in the committee decision that seven items of organisational learning had been identified and passed on to the new head of law enforcement [Ruari Hardy].
13. Mr Gaudion contends
    1. that the systems identified were already in place but had been ignored
    2. Those aside, no adequate rationale, reasons, information or findings were provided in order to enable him to establish with any type of certainty the basis upon which the decision was made or whether the decision maker had erred in fact or law.
14. In March 2019
    1. Mr Gaudion’s advocates filed an appeal against Home Affairs’ decision with the GPCC.
15. Historic issues?
    1. Prior to taking up his current post in July 2013, Mr Gaudion was employed in law enforcement for 30 years, primarily with the Guernsey Border Agency and as a senior investigation officer with what was formerly the Financial Intelligence Unit.
    2. Counsel for Mr Gaudion contend therefore that it is objectively reasonable for him to consider that the foregoing investigation as seemingly conducted, may have been motivated by historical professional animosities – in circumstances where the investigation as seemingly conducted was clearly not warranted on the facts.
    3. This is further exacerbated by the fact that their client came to hear of the potential investigation from friends or acquaintances which suggested details were leaked to non-parties.
16. Mr Gaudion argues
    1. that he has sufficient standing to ask for judicial review as he was the subject of the investigation and maker of the relevant complaint;
    2. the GPCC decisions affect and directly relate to him;
    3. he has, on any analysis a legitimate interest in the relief sought, and
    4. that the GPCC decisions impacted on him both personally and professionally in terms of integrity and independence as a senior employee with the GFSC.
    5. He also says that the complaint made against him was contrived.

As well as seeking judicial review, he wants the decision of the GPCC quashed on grounds that it acted beyond its beyond its powers and was unreasonable. He is also seeking costs.

The case has been adjourned until after 30 August when a date for a directions hearing in front of the Bailiff Sir Richard Collas will be set.

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The Serious Fraud Office’s (SFO) Corporate Co-operation Guidance has arrived in the form of a five-page document.

https://www.sfo.gov.uk/download/corporate-co-operation-guidance/

In it, the SFO defines co-operation as “providing assistance to the SFO that goes above and beyond what the law requires” and details eleven general practices that companies should consider when preserving material and giving it to the SFO.

There is specific guidance given relating to digital evidence and devices, hard copies and physical evidence, financial records and analysis of them, industry information and individuals.

There is the SFO’s assertion that, during an investigation, if an organization claims privilege it will be expected to provide certification by independent counsel that the material in question is privileged.

While the guidance will be of use to companies — and is arguably less demanding than many would have feared — it does make the point that compliance with the compulsory process does not, in itself, indicate co-operation. It even goes as far as to say that even “full, robust cooperation’’ will not guarantee any particular outcome.

So while it may well be the case that the guidance will help some who come under investigation from the SFO, reading it gives at least as much cause for concern as concrete advice.

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