“Such a predicament… surely cannot have any advantage for Guernsey’s finance industry”

Between the 12-15 June this year the three adult children and widow of a former CEO took the Guernsey branch of Credit Suisse to court. The former CEO was said to be responsible for an incredibly large business and was referred to only as ‘Mr B’.

The four plaintiffs were heirs to a large family fortune divided amoung several accounts held with Credit Suisse in Guernsey. However, when they tried to transfer the funds to newly opened accounts elsewhere their transactions were blocked due to “legal and regulatory requirements”. 

After trying multiple times to access funds the plaintiffs were forced to get lawyers involved and subsequently learned that “the Bank regarded itself as unable to comply with the various instructions which the Plaintiffs had given because they had previously made a Suspicious Activity Report (SAR) to the FIU with regard to these Accounts”. 

The plaintiffs were therefore required to prove to the courts that the money they were trying to transfer was not generated through criminal activity. 

After a lengthy hearing Lt-Bailiff Marshall found that “on the evidence presented (in particular by the Plaintiffs themselves) and the arguments put to me, that the sums of approximately $90Mn standing to the credit of the five Accounts held by the Plaintiffs with the Bank are not, nor do they in whole or in part directly or indirectly represent any person’s proceeds of criminal conduct”. 

In summing up Lt-Bailiff Marshall said: 

“The prospect of a customer’s possibly being caught up in such a predicament surely cannot have any advantage for Guernsey’s finance industry; it can only be a potential deterrent to doing business here, even if only a mild one, and one wonders just how necessary it is for the appropriate balance between the free flow of trade and appropriate law enforcement mechanisms to combat financial crime and money- laundering.  

“The system which has been adopted elsewhere, which puts a time limit on the efficacy of such a ‘do not pay’ instruction, if this is challenged by the customer, requiring the relevant authority to take steps within a certain time to justify its prohibition or allow it to lapse, would seem to provide a fair and acceptable balance which apparently works well in other jurisdictions.”

She said the merits of adopting such a system would be a political decision. 

“On any basis, though, I would respectfully endorse the view expressed [in a similar, prior case] that this point is worthy of re-consideration by politicians, with a view to possible amendment of the Law in the interests of the Guernsey finance industry and its responsible customers.”