With the National Crime Agency receiving over 400,000 suspicious activity reports a year (with a large proportion said to be premature and/or unjustified), the recent case of Lonsdale v National Westminster Bank PLC serves as a useful reminder that SARs may be disclosable and/or provide a basis for a defamation claim. Institutions should carefully consider whether the making of a SAR is required and the language and content used within it.
Mr Lonsdale held seven accounts with National Westminster Bank PLC (one personal, two joint accounts and four business accounts). For an eight day period in March 2017, the Bank froze one of Mr Lonsdale's joint accounts (the eight day period apparently reflecting the time for the Bank to seek consent from the NCA following the making of one or more SARs). The Bank then unblocked this account. In December 2017, the Bank froze all seven of Mr Lonsdale's accounts. Later that month, the Bank gave Mr Lonsdale 60 days' notice that it was closing his accounts.
Mr Lonsdale requested access to the documents relating to the freezing of his accounts and the decision to re-open them. The Bank provided limited documentary evidence, and did not disclose the SARs. Mr Lonsdale commenced proceedings against the Bank alleging a number of matters including breach of contract and defamation. He also sought inspection of the SARs on the basis that they had been mentioned in the Bank's Defence and Counterclaim.
In respect of the application for inspection of the SARs, Mr Lonsdale contended (amongst other things) that he had a prima facie entitlement to inspect the SARs because they were referred to in the Defence and Counterclaim. The Court considered whether it should exercise its discretion to permit inspection of documents. The Court held, that despite the Bank's submissions that (1) the SARs are confidential; (2) by disclosing the SARs, it may commit the offence of "tipping off" or prejudicing an investigation (contrary to Section 333A or 342 of the Proceeds of Crime Act 2002 respectively); and (3) alternatively that disclosure would likely prejudice the investigation, the fair disposal of the claim necessitated disclosure of the SARs.
Key take away points:
- SARs are not always going to remain confidential and may be disclosable in some circumstances.
- If an institution seeks to withhold disclosure of SARs on the basis of not committing a "tipping off" offence it needs strong evidence to support that.
- Careful consideration needs to be given to the drafting of SARs as they may form the basis of other claims against the writer.
If you would like more information on any of the issues raised, please do not hesitate to contact one of the key contacts listed below or your usual Ashurst contact.
With thanks to Julia Petinos, Solicitor, for her contribution.
