26 Oct 2018
A London-based barrister has challenged a bank’s decision to file suspicious activity reports (SARs) about him, after it froze his accounts and provided limited evidence to back its actions.
NatWest began filing SARs on David Lonsdale in March 2017, when it froze his joint account for a number of days. In December it then froze his remaining six accounts.
When he requested information about the account freezes, the bank reportedly provided ‘limited documentary’ evidence about the SARs and did not disclose them.
Lonsdale began legal proceedings against the bank after it informed him that it was going to shut down his accounts.
He made a number of claims, including breach of the Data Protection Act, and he also applied for permission to be allowed to view the SARs.
He told Legal Futures: “Money coming into my bank accounts came from transparent and lawful sources, that is to say my rental property and my practice at the Bar … to this day I have no understanding as to why the bank took the action that it did.”
The court granted him permission to view the SARs and also stated that the bank had not given him evidence to back any suspicions of money laundering.
The judge stated, however, that: “Although the bank has not adduced any evidence to establish that its refusal to execute Mr Lonsdale’s instructions was justified by reason of a relevant genuine suspicion, it is apparent that the bank has not done so, at this preliminary stage, because it considers the information to be confidential.”
Commenting on the impact of the case, lawyers at Allen & Overy state:
This was a summary judgment/strike out application, so is of limited precedent value. The case has settled, so we will not see the issues that arose fully resolved.
We are not expecting this decision to cause a rush by customers to bring claims of this sort against banks:
• Courts have historically provided banks with considerable protection and discretion relating to SARs due to the fact that banks are merely seeking to help law enforcement and avoid criminal liability. The courts would not want to encourage civil claims of this sort.
• It is hard to imagine why a bank would file a SAR without a genuinely held suspicion (even if that suspicion turns out to be unfounded).
• Many customers would be deterred by the potential cost. The claimant in this case was a barrister, who represented himself, so this aspect was less of an issue for him.
The ruling does however provide a reminder that should a bank be faced with a similar claim, it is very unlikely to be able easily and quickly to defeat it (by way of strike out).
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