Shah V Hsbc
1. Review the decision in the case of Shah v. HSBC (2012) and evaluate the implications of the decision for regulated financial services firms. In particular:
* What are the key issues in the case? * Outline the decision of the court * Evaluate what practical guidelines can be taken from the case by regulated financial services firms
Under the proceeds of crimes act 2002 (POCA) all UK financial institutions and other regulated firms not only have to report suspicions of money laundering but they must also seek consent from the Serious Organised Crime Agency (SOCA) to carry out any transactions which they suspect are related to the proceeds of the crime. SOCA have a maximum of 7 working days with which to respond to any Suspicious Activity Report (SAR) and until the reporting firm receives actual or deemed consent under the legislation, it must not complete their customer’s instruction without the risk of committing a criminal offence. (See SOCA website http://www.soca.gov.uk/about-soca/the-uk)
Background
Mr Jayesh Shah was a Zimbabwe-based business man with business interests in a range of countries including Central Africa. He opened his accounts with HSBC in 2002. Between September 2006 and February 2007, 4 separate transactions, totalling $38,177, 582.69 were delayed by HSBC. Date of payment instruction | Amount to be transferred | Date of authorised disclosure (SAR) | Date of consent | Date transfer effected | 20th September 06 | $28,807,432.88 | 21st September 06 | 2nd October 06 | 3rd October 06 | 26th September 06 | $7,282.50 | 28th September 06 | Not applicable (payment instructions were cancelled on 29th September 06) | Not applicable | 6th February 07 | $8,904,910.65 | 7th February 07 | 14th February 07 | 15th February 07 | 28th February 07 | £457,956.66 | 28th February 07 | 2nd March 07 | 5th March 07 |
Mr Shah approach HSBC requesting an explanation as to the delays in the payments to which the response was that they were
* What are the key issues in the case? * Outline the decision of the court * Evaluate what practical guidelines can be taken from the case by regulated financial services firms
Under the proceeds of crimes act 2002 (POCA) all UK financial institutions and other regulated firms not only have to report suspicions of money laundering but they must also seek consent from the Serious Organised Crime Agency (SOCA) to carry out any transactions which they suspect are related to the proceeds of the crime. SOCA have a maximum of 7 working days with which to respond to any Suspicious Activity Report (SAR) and until the reporting firm receives actual or deemed consent under the legislation, it must not complete their customer’s instruction without the risk of committing a criminal offence. (See SOCA website http://www.soca.gov.uk/about-soca/the-uk)
Background
Mr Jayesh Shah was a Zimbabwe-based business man with business interests in a range of countries including Central Africa. He opened his accounts with HSBC in 2002. Between September 2006 and February 2007, 4 separate transactions, totalling $38,177, 582.69 were delayed by HSBC. Date of payment instruction | Amount to be transferred | Date of authorised disclosure (SAR) | Date of consent | Date transfer effected | 20th September 06 | $28,807,432.88 | 21st September 06 | 2nd October 06 | 3rd October 06 | 26th September 06 | $7,282.50 | 28th September 06 | Not applicable (payment instructions were cancelled on 29th September 06) | Not applicable | 6th February 07 | $8,904,910.65 | 7th February 07 | 14th February 07 | 15th February 07 | 28th February 07 | £457,956.66 | 28th February 07 | 2nd March 07 | 5th March 07 |
Mr Shah approach HSBC requesting an explanation as to the delays in the payments to which the response was that they were