UK: Redaction Of Bank Employees' Names Preserved In Shah v HSBC

Last Updated: 8 November 2011
Article by Omar Qureshi and Joe Smith

In the long-running dispute, Shah and Another v HSBC Private Bank (UK) Ltd (see our  Law-Now reporting on the earlier judgment of the Court of Appeal on 4 February 2010), the Court of Appeal has finally considered what level of disclosure the bank was required to give to prove its money laundering suspicions.  In particular, the Court considered whether the bank was required, as part of standard disclosure, to disclose the names of its employees who reported suspicions of money laundering to the bank's money laundering reporting officer ("MLRO") in circumstances where there was a dispute as to the genuineness of those suspicions. 

The Court found, on the facts of the case, that the names of the individuals did not need to be disclosed as that information neither adversely affected the bank's case, nor adversely affected or supported the claimant's case.

To view the article in full, please see below:




Full Article

In the long-running dispute, Shah and Another v HSBC Private Bank (UK) Ltd (see our Law-Now reporting on the earlier judgment of the Court of Appeal on 4 February 2010), the Court of Appeal has finally considered what level of disclosure the bank was required to give to prove its money laundering suspicions. In particular, the Court considered whether the bank was required, as part of standard disclosure, to disclose the names of its employees who reported suspicions of money laundering to the bank's money laundering reporting officer ("MLRO") in circumstances where there was a dispute as to the genuineness of those suspicions.

The Court found, on the facts of the case, that the names of the individuals did not need to be disclosed as that information neither adversely affected the bank's case, nor adversely affected or supported the claimant's case.

Mr Shah and his wife, Mrs Shah, (the "Claimants") are claiming damages of $300 million from HSBC Private Bank (UK) Ltd ("H Bank"). The losses were allegedly sustained as a result of three delays and one refusal to execute certain instructions given by Mr Shah to transfer funds from H Bank to an account that he held with Credit Agricole. H Bank delayed acting on the instructions because the bank reported suspicions that the proposed transactions may have resulted in money laundering to the Serious Organised Crime Agency ("SOCA") and sought permission to proceed. Once a report had been made, the bank was unable to carry out the instructions until SOCA either permitted or did not refuse permission to make the transfers.

In the previous decision relating to this matter, as reported in our earlier Law-Now, the Court of Appeal held that where the bank was, on the face of it, in breach of contract for not complying with their clients' instructions, it was for the bank to prove that it genuinely held the suspicions of money laundering alleged. This could require the bank to provide evidence of the suspicion, including the documents reporting those suspicions to SOCA. However, whether proving the suspicions did require disclosure of such evidence in this case, was not decided at that time.

The bank subsequently submitted witness evidence from its MLRO relating to the process adopted by the bank in making reports to SOCA. The bank also disclosed, as part of standard disclosure, certain documents containing the information considered by the bank in forming its suspicions, but redacted the names of the employees concerned (instead indicating the function of the employee in question and designating each individual a reference number). A dispute arose as to whether the bank was entitled to redact the names of the individuals.

In the lower court, Coulson J held that:

(1) the bank's obligation to make standard disclosure required it, in principle, to reveal the names of its employees who reported suspicions of money laundering to the MLRO; but

(2) the bank was prima facie entitled to maintain their anonymity on the ground of public interest immunity. The bank appealed the Judge's finding that standard disclosure required the individuals' names to be revealed in principle, while the Claimants appealed the Judge's finding that their anonymity could in fact be maintained.

Findings

The Court of Appeal, in its judgment of 13 October 2011, dismissed the Claimants' appeal and allowed the defendant bank's cross appeal.

The decision turned on the facts of the case. When the claim had first been served, the Claimants had raised four positive claims against the bank as to why the alleged suspicions were wrong and should not have resulted in delay to processing their transfer instructions. All of those arguments were rejected by the court in its findings on a summary judgment application by H Bank. However, what remained was the question whether the bank genuinely held its suspicions, which resulted in the report to SOCA and the delay to processing the transactions.

The Court of Appeal noted that there was not, therefore, any positive case put forward by the Claimants which the redacted information could support. Accordingly, the only question was whether the redacted material adversely affected the bank's defence. On the facts of the case, the Court found that the Claimants' desire to obtain disclosure of the names was a "fishing expedition". Their disclosure was not required by the obligation to give standard disclosure under the Civil Procedure Rules.

The Court noted that if there was an allegation of bad faith involving one of the employees who had raised suspicions, the identity of whom H Bank was seeking to conceal, then their identity could be disclosable as it could support the other party's case. However, there was no genuine issue of this kind here. H Bank had disclosed significant material relating to the generation of its suspicions and had supported this with witness evidence from the MLRO. It was content to rely on this to evidence the genuine nature of its suspicions and, on the facts, it was not required to disclose anything further.

Comment

H Bank's cross appeal succeeded as, on the facts, the information to be redacted neither supported the Claimants' case nor adversely affected H Bank's case. However, the case turned heavily on the facts (including the lack of any positive case by the Claimants concerning the genuineness of the bank's suspicions) and the Court appeared to have been impressed by the level of disclosure and evidence already given by the bank as to its suspicions. In fact, Lewison LJ noted that H Bank had gone further in its disclosure than had been suggested by the Court of Appeal in the previous summary judgment application, by not only providing evidence from its MLRO, but also disclosing the information on which he relied in forming his suspicions (subject to redacting the names of the other individuals in the bank).

Therefore, banks still need to be mindful when considering the processes and procedures they have in place in terms of money laundering reporting as these could be laid open to scrutiny. The robustness of those procedures and the paper trail showing that they have been complied with, could be an important factor in future disputes between customers and banks where payment instructions are not complied with due to money laundering suspicions. The value of a clear and documented reporting process has not changed.

Finally, Lewison LJ and Munby LJ agreed that it was not appropriate in this case to decide whether public interest immunity could be relied on to avoid disclosure of individuals' names. If in a future case it were found that individual bank employees' names were disclosable, then whether such immunity could be relied on would depend on whether that immunity outweighed any countervailing considerations of public interest.

Please click here to read the judgment: Shah and Another v HSBC Private Bank (UK) Ltd [2011] EWCA Civ 1154

Please click here on this link to read the June 2011 judgment in the High Court: Shah & Anor v HSBC Private Bank (UK) Ltd [2011] EWHC 1713 (QB)

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 02/11/2011.

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

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

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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