UMBS Online Ltd and SOCA

SOCA must give consent to proceed with a transaction following the making of a suspicious activity report (SARs), unless there is good reason not to.

This was the Court of Appeal's decision when granting permission for judicial review of SOCA's decision to refuse consent during the 31 day moratorium period, and their refusal to review this decision.

The case, between UMBS Online Ltd and SOCA [2007] EWCA Civ 406, revolved around the bank accounts of a money transmission business, which seeks to enable international traders to effect payment almost instantaneously upon the deal being completed via intra-account transfers. Funds can then be transferred to the traders' normal external bank account. UMBS used another company, Currency Services, to process these external payments.

In January 2007, UMBS changed their bankers to the Laiki Bank of Cyprus . By early February 2007, they were experiencing delays with payment requests and then payments stopped altogether. Seven days later, Currency Services provided UMBS with a letter advising that the Laiki Bank had threatened to close down UMBS' accounts resulting in them making a SAR to SOCA. They advised that SOCA had given consent so that transfers could continue.

However, it was at that point that the Laiki Bank also made a disclosure to SOCA about UMBS' accounts. Evidence was not led as to whether the information in the SARs provided by the Laiki bank was different to the information provided by Currency Services; however, SOCA chose to refuse consent for the bank to allow the funds to be dealt with. UMBS wrote to SOCA advising of the extremely damaging impact of this decision on their business and urged SOCA to reconsider the decision.

SOCA advised:

'The refusal of consent is effective until the expiry of the moratorium period of 31 days. In the absence of a further request for consent from the Laiki Bank and a change in circumstances, the refusal of consent will not be revisited by the Serious Organised Crime Agency.'

UMBS sought to judicially review SOCA's decision to refuse consent to the bank and also their decision to refuse to review the refusal following UMBS's letter.

Permission to review was denied at first instance and appealed. Due to delays in hearing the appeal, the complexities of the arguments, and Revenue and Customs obtaining a restraint order over the bank accounts, the Court took a pragmatic approach. The Court proceeded to hear the application for judicial review on the decision not to review the refusal, and granted permission for the judicial review of the initial refusal to be heard before the High Court.

The Court held that SOCA must keep a decision to refuse consent under review and should provide consent if they no longer have a good reason for refusing it. The party affected can make a request to have the refusal reviewed and SOCA have a duty to look at the matter again.

Interestingly, no comment was made about the provision of the information to UMBS regarding the making of the SARs, so unfortunately no judicial clarity has been provided about the tipping off provisions.