Sponsored briefing: Prove it or lose it

Simon Thomas and Clara Hamon of Baker & Partners outline Jersey’s new anti-money laundering law

Jersey has bolstered the tools available to tackle money laundering with legislation to establish a non-conviction-based confiscation regime. The Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018 came into force last summer. It was introduced in response to a recommendation in MONEYVAL’s 2016 report following an inspection of the island’s anti-money laundering regime and it means assets can be forfeited where a case cannot be proven to the criminal standard.

There are now three ways in which property can be forfeited, namely:

I. Where cash is seized with a view to it being forfeited (replacing the Proceeds of Crime (Cash Seizure) (Jersey) Law 2008).

II. A new summary procedure for forfeiture of property in bank accounts that have been subject to a ‘no consent’ by the Jersey Financial Crimes Unit.

III. A procedure for the forfeiture of property in bank accounts that is otherwise suspected to be tainted property, ie, used in or intended to be used in, unlawful conduct, or obtained in connection with unlawful conduct.

Summary forfeiture procedure

The part of the law that has drawn most interest is the summary forfeiture procedure after a suspicious activity report (SAR) has been filed.

The Attorney General may serve notice on the account holder and the bank requiring them to attend court to show cause why the property should not be forfeited where:

• he has reasonable grounds to believe the property held in the bank is tainted property; and
• a consent request must have been made and refused; and
• the refusal must have been in place for at least 12 months.

If the respondent fails to attend court, the Attorney General may apply immediately, without notice, for an order for forfeiture of the property.

If an account holder wishes to contest the notice, the burden is on them to satisfy the court on the balance of probabilities that it is not tainted property. It remains to be seen what sort of challenges will be raised in contested hearings, but it is thought that this procedure will become a much used component of the law.

Property Restraint Orders

Even where a SAR has not been filed, the Attorney General may apply instead for a property restraint order (PRO) to freeze the property while either an investigation is conducted or proceedings are concluded. Once property is subject to a PRO, the Attorney General can then apply for it to be forfeited.

Just as a PRO is an interim measure, which may ultimately lead to a forfeiture order if the owner does not prove to the civil standard that the funds are not tainted, a cash detention order is also intended to hold the ring in respect of seized cash pending an application for forfeiture.

First decision

On 4 June 2019, the first case concerning a notice issued under the law came before the Royal Court. The notice related to an account with a balance of just under £34,000, in relation to which a SAR had been filed. The recipient contested the notice and filed affidavit evidence. The Attorney General applied to adjourn the hearing date and for a direction that the account holder attend in person for cross-examination. The court declined to make such direction and made it clear the summary process is intended to be quick and proportionate, although it did note that this might affect the weight given to his affidavit.

If the court is inclined to deal with these matters expediently, then it may be as well for a notice recipient to work towards a prompt response and early hearing date before further evidence is obtained to establish reasonable grounds that it is tainted property. However, the court commented that more complex cases involving greater sums may well justify a more extended process.

Comment

It is interesting to consider the notice procedure in light of the recent report by the Law Commission of England and Wales, which found that around 15% of SARs filed did not meet the threshold of suspicion and that reasonable objective grounds to suspect were only articulated in 52.4% of the reports analysed. This appears to confirm the view that defensive reporting is prevalent. It is not clear to what extent defensive reporting is also prevalent in Jersey. Given that the law potentially brings under the scrutiny of the courts any property that is the subject of a SAR followed by a refusal of consent, the consequences of making a SAR have now become much more significant.

An added complication from the Jersey perspective is that, unlike in the UK, there is no legislative time limit within which the authorities must make a decision as to a refusal of consent. Where consent is not forthcoming, property can be informally frozen for years because banks and others are unlikely to deal with the property for fear of committing an offence. Owners of property could find themselves suddenly faced with a summary application for forfeiture after many years of inaction by the authorities. The initial indications that the Royal Court intends to deal with summary applications swiftly could impact on both sides. The authorities might find themselves not having the time to thoroughly investigate an owner’s assertions that the property is not tainted. On the other hand, a property owner might find themselves ‘bounced’ into dealing with an application in short order. Anyone faced with a summary application would be well advised to assemble evidence quickly if they are to stand the best chance of showing that property is not tainted.