Daren Allen & Nick Marsh consider a bank's conflicting obligations when it suspects money laundering
In the recent case of Shah v HSBC Private Bank (UK) Ltd [2009] EWHC 79 (QB), [2009] All ER (D) 204 (Jan) the court considered a bank's potentially conflicting exposure, when it suspects money laundering. On the one hand it may be liable to criminal prosecution if it proceeds with a transaction without consent, yet on the other it has a contractual obligation to its customers to comply with instructions.
Shah v HSBC can be summarised as follows:
● The claimants, who were resident in Zimbabwe, held an account with HSBC Private Bank (UK) Limited.
● Between 20 September 2006 and 28 February 2007, the bank delayed execution of four separate payment instructions given by the claimants, including an instruction to transfer approximately US$28m.
● In each case the bank suspected that the funds in the claimants' account were criminal property. Before the bank proceeded with each transaction, it made an authorised disclosure to the authorities seeking consent.
● Once consent
