NATIONAL CRIME AGENCY APPEAL SUCCESSFUL AGAINST ORDERS DISPLACING POCA PROCEDURE

In the case of National Crime Agency v N and Royal Bank of Scotland plc [2017] EWCA Civ 253, the Court of Appeal allowed the appeal of the National Crime Agency (NCA) against orders for a bank to execute customer transactions, without consent from the NCA, when the bank had made suspicious activity reports on related bank accounts.

The claimant (N) held some accounts with the Royal Bank of Scotland (RBS), some of which RBS suspected contained proceeds of crime.

RBS froze the accounts and requested consent from the NCA, in compliance with the Proceeds of Crime Act 2002 (POCA), to terminate the relationship and return the funds in the accounts to N.

Meanwhile, N made an application for injunctive relief requiring RBS to honour certain past payment instructions.

The order was granted and the court noted RBS, in carrying out the payment instructions, would not

“commit any criminal offence under the Proceeds of Crime Act 2002 or otherwise” and would not be obliged
“to make any disclosure as would or may be required by the Criminal Law or any other law.”

A further order on similar terms was made requiring RBS to carry out certain other transactions for N.

The NCA appealed the orders, not to unwind the transactions that were executed but to clarify the legal position.

The appeal was granted by the Court of Appeal on all grounds; the orders are requiring the bank to execute the transactions were not justified in this case. Key points include:

through Part 7 of POCA Parliament has laid down the relevant procedure and that where a bank suspects the money in the customer’s account is criminal property and freezes an account, ordinarily the court should not intervene during the course of the seven day notice period and 31 day moratorium period – Parliament has entrusted to the NCA the task of deciding whether consent should be given to the carrying out of instructions and consequent transactions following authorised disclosure;
The jurisdiction of the court to grant interim relief though is not completely ousted. The legislation does not so provide. If it had been intended to remove such important powers from the court and to deprive parties of correspondingly important rights affecting their access to justice, clear legislative wording would be required;
the NCA has stated publicly that consent does not imply NCA approval of the proposed act, that funds are clean or that no criminality is involved, so one cannot infer from NCA consent (in this or in other cases) that there is no evidence known to the NCA that the monies constitute or represent a benefit from criminal conduct;
There was evidence of a genuine suspicion in this case, so the bank’s concerns about criminal prosecution were more than “fanciful”.
1. The question of whether RBS would commit any criminal offence in making the transactions and whether RBS was obliged by the criminal law to make disclosure were substantive law questions that only permit of a final rather than a temporary answer, which is a factor weighing against an interim order; and
2. a high degree of assurance is required for mandatory injunctive relief, and a close consideration of the merits is particularly important in a case in which the grant of the interim declaratory relief is likely to be determinative of the issue, as in this case.

In addition, the NCA has stated that it does respond to urgent requests, and does so promptly,