HSBC customer claims for anti money-laundering delay

HSBC customer claims for anti money-laundering delay – Banks could in future have to compensate customers whose transactions are delayed by anti money-laundering procedures that are poorly applied, The Times has reported. In the case of Shah and another v HSBC Private Bank (UK) Ltd, the Court of Appeal has ruled that Jayesh Shah and Shaleetha Mahabeer have the right to challenge HSBC Private Bank for having delayed a $28 million transfer. According to the Incorporated Council of Law Reporting, the bank asserted that it had suspected that the transaction constituted money-laundering for the purposes of the Proceeds of Crime Act 2002, meaning that the transfer had to be delayed while reported to the Serious Organised Crime Agency. Eventually, the transaction was completed and Mr Shah claimed the delay cost him over $300 million. The claimants subsequently challenged the grounds on which the bank’s suspicions were raised but a case brought by Mr Shah for compensation was thrown out at an earlier court hearing. However, last week’s Court of Appeal ruling means that Mr Shah can now pursue HSBC for his losses.

This case shows the English Court of Appeal has confirmed that the relevant suspicion by a bank filing a Suspicious Activity Report (SAR) or refusing to deal with funds under the Proceeds of Crime Act 2002 need not be based on reasonable grounds but allowed the customer to require the bank to prove that it had the relevant suspicion by pursuing the case to trial so that the bank can make good its contention in this respect.