Lessons To Be Learned From A Recent Regulatory Matter

We were recently instructed by a Bank in relation to a regulatory matter.  The Bank had made a suspicious activity report to the Financial Investigation Unit ("FIU") due to their concerns about the potential source of funds in an account.  These concerns were raised by two articles which had been discovered in the public domain relating to an individual and his conviction by a Brussels court of VAT fraud.  It was the Bank's belief that the individual was primarily the source of wealth for the account and it did not know whether the funds were the proceeds of crime.  Following correspondence with the FIU the Bank was told that it did not have consent to end the relationship with the customer.  As a consequence, the Bank was prohibited from transferring or otherwise disposing of the funds pursuant to section 39(3) of the Criminal Justice (Proceeds of Crime)(Bailiwick of Guernsey) Law, 1999.