Shah V Hsbc

1304 Words6 Pages
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
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The Court also stated that a claimant would have to demonstrate the bank had acted in bad faith before civil liability would be entertained.
In its decision the Court of appeal did make reference to the dual pull on Banks in having to comply with the heavy demands of a regulator whilst mitigating civil actions from potentially disgruntled customers. It also made reference to a previous court case (De Silva v NatWest Bank 2006) where the court made specific reference to the meaning of the word ‘suspect’. Here, in relations to the claim by Mr Shah that the reason for the suspicion itself was irrational, negligently self-induced and mistaken, the court confirmed that HSBC merely had to think that there was a possibility, which was more than fanciful, that the relevant facts exist when completing its SAR. On a wider note the Court also deemed that in the future having a suspicion may constitute a good defence for Banks.
The subject of tipping off can be one of the most ambiguous subjects within financial organisations. There are clear laws that have financial and punitive repercussions for those who recklessly or mistakenly divulge the suspicions of the firm they are working on behalf of. The court here ruled that the use of the legislation surrounding tipping off cannot be endlessly relied on when declining the request of
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