Jersey: Suspicious Minds - Getting Caught In A Trap - Jayesh Shah & Anor v HSBC Private Bank (UK) Limited

Last Updated: 15 March 2010
Article by Matthew Thompson, Steve Meiklejohn and Edward Mackereth

Most Read Contributor in Jersey, September 2016

On 4 February 2010, the English Court of Appeal delivered a judgment in the above case, which acts as a warning, in particular to banks (but also to other financial service providers) regarding the possibility of having to disclose evidence relating to and/or justify in court, suspicions upon which a suspicious activity report (SAR) was filed and which lead to a refusal to act on client instructions.

Jersey's anti-money laundering legislation and, in particular, the position in which a bank can find itself having filed an SAR and not having been given consent by the JFCU to carry out the transaction (on occasion for an indefinite period) has been a subject for debate for some time. Such a situation leaves the customer with the option of pursuing a civil law claim against the bank (typically for breach of duty/mandate) or a judicial review of the JFCU's refusal to consent.

Summary Of Facts

In broad summary, Mr Shah is suing HSBC for losses he alleges were caused as a result of HSBC's failure to execute certain transfer instructions he had given, and the bank's refusal to provide certain information that he had requested. The delays in HSBC carrying out transfer instructions arose as a result of SARs having been filed by HSBC with SOCA in the UK in respect of those instructions. Mr Shah alleges that it was irrational for the bank to have suspected him of money laundering or that such suspicion was negligently self-induced or based on a mistake. The refusal by HSBC to provide information (ie details concerning HSBC's communications with SOCA) was claimed to have resulted in the Reserve Bank of Zimbabwe seizing assets worth more than US$300m. In its defence to the claims, HSBC relied upon its suspicions concerning the transfers that Mr Shah had instructed be made.

The High Court granted summary judgment in HSBC's favour. In so doing it applied earlier decisions of the English Court including K Ltd v Nat West Bank Ltd. That case involved a customer seeking an immediate injunction to require its bank to carry out instructions notwithstanding the bank's filing of an SAR and having had no consent at that stage to carry out the transaction. It was held in K Ltd that a court would not expect or require a bank's employees to give evidence in relation to suspicions it held; because of tipping off concerns at that stage, only the bank's legal advisor would be able to give such evidence. The High Court concluded that Mr Shah's claims could not succeed unless bad faith was established on the part of HSBC, which was not part of Mr Shah's claim.

Court Of Appeal Decision

The Court of Appeal distinguished Re K Ltd, on the basis that this was not a summary proceeding brought at an early stage. The Court of Appeal held that, in a case in which damages for breach of contract/duty were sought in proceedings brought after the event, Mr Shah was entitled to put HSBC to proof with regard to whether it had the relevant suspicion for the purposes of the proceeds of crime legislation.


Mr Shah's case might never reach trial and it will remain to be seen whether HSBC will in fact be required to make disclosures or produce witnesses to prove what suspicion it actually had. However, the decision of the Court of Appeal confirms that, in principle, banks and other financial service providers can be required to justify suspicions held. The Court of Appeal considered that if the Re K Ltd reasoning was applied across the board such that a bank was never to be required to give evidence relating to the suspicion upon which an SAR had been filed, claims against banks in these circumstances would be impossible to bring.

Although the English legislation concerning the granting of consent to transact following a relevant disclosure is different to that in Jersey, the relevant state of mind (knowledge or suspicion) that could expose a bank to committing a money laundering offence under both English and Jersey law is materially similar. The decision in Shah is one that would be considered persuasive in Jersey and in many respects supports the views of the Royal Court as described in our case summary on the Royal Court's decision on 25 April 2008 in Re Representation Gichuru Frozen Funds - Client Briefing, ( namely that a bank will be required to place before the Court evidence of its suspicion should it face a claim by a customer for failing to act on instructions in circumstances where following the filing of an SAR the JFCU has refused to consent to the transaction.

The implications for banks and other financial institutions not only include the prospect of having to disclose and justify suspicions in Court, but also careful consideration will have to be given to how suspicions are recorded and documented internally. The potential to have to give disclosure in relation to suspicion, might well also give rise to claims relating to the speed within which a bank reacted to those suspicions.

In light of ongoing requirements under Jersey's anti-money laundering framework, banks and other financial service providers in Jersey should give thought as to whether internal procedures and/or training are adequate to put the bank in the best position should it face a claim such as the one brought by Mr Shah. It must, however, be borne in mind that the legal threshold for a suspicion is low: a person must think there is a possibility, which is more than fanciful. Accordingly, the threshold for making at least an internal disclosure will be similarly low.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.