We can all envisage a scenario where a firm, either through a Court Order or through the disclosure Rules within the Rules of the Court, is faced with the conundrum of which law to follow where a suspicious activity report has been filed with the local FIU.
In these circumstances, we would always suggest that legal advice is obtained from a local advocate.
The UK Home Office have recently published some excellent guidance to assist UK firms navigate this minefield. We emphasise in the most strongest terms that the guidance issued by the UK Home Office is based on UK law and UK Civil Court Procedures which differs from IOM law, especially in the important area of tipping off. However, there is much to be said for reading this guidance as it contains some very sensible and pertinent advice which is not dependent upon the underlying wording of the legislation.
For example, in paragraph 7 of the guidance the UK Home Office state:
“As far as possible, reporters should avoid referring to SARs in the documentation of their internal decision-making processes.
Instead, in cases of a decision to exit or terminate a customer relationship, the documents prepared for the purpose of that decision making should focus upon the basis for the decision, which will be specific to each case and may include: commercial factors; risk appetite reasons; non-compliance with agreed terms and conditions; or where the reporter is unable to apply the customer due diligence measures required by [the Anti-Money Laundering and Combatting the Financing of Terrorism Code 2019 (as amended)]* (which might then have been followed by the making of a SAR).
Reference to the basis for the decision may help reporters to explain and justify their decision to a customer, before reaching the point of litigation wherever possible, without reliance upon or reference to a SAR. It may also remove any subsequent need for reliance on the SAR in litigation that arises and reduce the relevance of SARs to such litigation.”
* We have substituted applicable and relevant IOM legislation
The Home Office circular can be found here