UMBS Online Ltd., R (on the application of) v Serious Organised Crime Agency Rev 2

Under the Proceeds of Crime Act 2002, SOCA must not withhold consent to a bank’s dealing with suspected criminal property without good reason. That obligation requires continuing review and is not conditional on a fresh request from the bank. A customer directly affected by a frozen account may ask for reconsideration, and SOCA must act independently when circumstances change or the original reason no longer exists. A decision requiring both a further bank request and changed circumstances before reconsideration is unlawful. Judicial review may nevertheless operate with limited disclosure where revealing the basis of suspicion could prejudice a money-laundering investigation.

UMBS Online Ltd sought judicial review of SOCA decisions refusing consent under the Proceeds of Crime Act 2002 to Laiki Bank and Currency Solutions Ltd dealing with funds held on trust for UMBS customers.

Lloyd Jones J dismissed the application for permission on 5 March 2007. The Court of Appeal treated the matter as an urgent application. It quashed SOCA’s refusal of 27 February 2007 and ordered reconsideration. After SOCA made a further refusal on 19 March and a restraint order was obtained, the court granted permission to challenge the refusals of 21 February and 19 March and directed that those issues proceed in the Administrative Court.

The principal issues were whether SOCA had acted irrationally, whether its refusal letter unlawfully restricted reconsideration, and whether a request for reconsideration had to come from the bank.

1. Disposition. The Court of Appeal quashed SOCA’s decision of 27 February 2007 and ordered urgent reconsideration. It later granted permission for judicial review of the decisions of 21 February and 19 March and remitted those matters to the Administrative Court. The legality of the 21 February refusal was not finally determined.
2. Good reason and continuing review. Ward LJ, whose judgment formed the principal reasoning, held that SOCA is an immensely powerful statutory body and must not withhold consent under the Proceeds of Crime Act 2002 without good reason. SOCA must keep its decision under dynamic review throughout the moratorium period and must grant consent when there is no longer good reason to withhold it.
3. Unlawful decision letter. The objective meaning of SOCA’s letter was that both a further request from Laiki Bank and a change in circumstances were required before reconsideration. That construction conflicted with SOCA’s continuing-review obligation. The author’s subjective intention and later explanation could not cure the error.
4. No requirement for a bank request. Section 335 prescribes who may give appropriate consent and when consent may be treated as given. It does not require a request for reconsideration to come from the bank. A person directly affected by the freezing of an account may ask SOCA to review the refusal, and SOCA must act independently of a request from any particular person.
5. Confidentiality and judicial review. The court accepted that disclosure of the underlying suspicion or investigation might prejudice the statutory inquiry. Following the approach in K Limited v National Westminster Bank & ors [2006] EWCA Civ. 1039, judicial review may therefore have to proceed without the full evidential picture. Reg (Energy Financing Team Ltd) v Bow Street Magistrates [2006] 1 WLR 1316 was a different warrant case and did not require wider disclosure here. Sedley LJ added, in a concurring observation, that the statutory scheme must accommodate common-law justice unless Parliament prevents it.

• Court of Appeal (Civil Division) — [2007] EWCA Civ 406. The court quashed the 27 February refusal, ordered reconsideration, and remitted the remaining judicial-review issues.
• Administrative Court — Lloyd Jones J dismissed UMBS’s application for permission to apply for judicial review on 5 March 2007.