LLC Synesis v Secretary of State for Foreign, Commonwealth and Development Affairs

The phrase “reasonable grounds to suspect” does not impose a standard of proof. A decision-maker may consider all available information, including hearsay, allegations and intelligence, assess its weight, draw inferences and form the required state of mind in good faith. On review under the Sanctions and Anti-Money Laundering Act 2018, the court must not substitute its own assessment. It asks whether the decision was based on no evidence or was irrational, allowing a broad margin for expert policy judgments. Under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019, technology need only be capable of contributing to a proscribed activity; proof of actual contribution is unnecessary. The evidence must be assessed as a whole.

The claimant, a Belarusian technology company, was designated under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 on the basis that its Kipod surveillance technology had supported the repression of civil society and serious human-rights abuses. Following a ministerial review, the designation was upheld on 7 July 2022. The claimant challenged that decision under section 38 of the Sanctions and Anti-Money Laundering Act 2018. It argued that the Secretary of State had applied the wrong standard, lacked reasonable grounds to suspect that it was an involved person, acted ultra vires and reached a disproportionate decision. The central issue was whether the decision was rationally open to the Secretary of State on the evidence available.

The application was dismissed.

1. Under section 11 of the Sanctions and Anti-Money Laundering Act 2018 and regulation 6 of the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019, “reasonable grounds to suspect” describes a state of mind which is partly objective and partly subjective. It does not import a standard of proof. The decision-maker must consider all material and information known, or which ought to have been within his knowledge following reasonable inquiry. That may include hearsay, multiple hearsay, allegations and intelligence. The decision-maker must assess the quality and weight of the material, draw inferences from it and acquire the required state of mind in good faith (paras [71]-[78], [84]).
2. On a review under section 38(4) of SAMLA, the court cannot stand in the shoes of the decision-maker. Its role is to determine whether the decision was based on no evidence or was irrational. The Wednesbury standard has flexibility, and a broad margin is appropriate where the decision involves expert judgments in an area of government policy (paras [79]-[83]). The matrix-of-material approach in Secretary of State for the Home Department v MB remained apt, but the approach in paragraph 60 of that case requiring the court itself to decide whether the facts amounted to reasonable grounds could not be followed in light of QX v Secretary of State for the Home Department and Supreme Court authority (paras [74]-[81]).
3. Regulation 6(3)(d) is broad. Reasonable grounds to suspect involvement in supplying technology which could contribute to repression or serious human-rights abuse do not require proof that the technology actually contributed to a particular activity. The Kipod system had the capacity to identify and track targeted individuals. The Secretary of State was entitled to rely on the cumulative material, including credible reports and contextual evidence, even though the precise mechanism by which the system may have been used against a particular activist could not be established (paras [86]-[95]).
4. The Economic Crime (Transparency and Enforcement) Act 2022 removed the appropriateness criterion in regulation 6(1)(b). The Secretary of State nevertheless retained a discretion, and proportionality remained relevant to the extent applicable. The Secretary of State had considered the impact on the claimant and reached a conclusion which was not unreasonable. Grounds 2 and 3 therefore failed once Ground 1 failed (paras [22]-[23], [96]-[99]).

The section 38 application was dismissed (para [100]).

The designation was made on 31 December 2020 and upheld on ministerial review on 7 July 2022. No appellate history is stated in the judgment.